Research Solutions (NASDAQ: RSSS) lifts margins and swings to profit in Q3 2026
Rhea-AI Filing Summary
Research Solutions, Inc. reported improved profitability for the quarter and nine months ended March 31, 2026. Quarterly revenue was $12.1M, down 4.3% year over year, but net income rose to $0.86M from $0.22M as operating expenses declined and gross margin reached 51.7%.
For the nine months, revenue was $36.2M versus $36.6M a year earlier, while net income swung to $2.16M from a loss of $1.09M. Platforms revenue grew as Transactions declined, cash stood at $12.1M with no borrowings on the $0.5M credit line, and stockholders’ equity increased to $19.1M.
Positive
- None.
Negative
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Insights
Profitability improved despite flat revenue, with stronger margins and lower risk from earnout liabilities.
Research Solutions held revenue roughly steady at $36.2M for the nine months while expanding gross margin from 48.8% to 51.5%. Higher-margin Platforms revenue grew double digits, offsetting weaker Transactions activity and helping lift operating income.
Net income improved to $2.16M from a loss of $1.09M, aided by lower operating expenses and prior-year non‑cash earnout remeasurement not repeating. Cash of $12.1M and no debt provide financial flexibility as the company continues quarterly payments on the Scite earnout.
The contingent earnout liability fell from $14.0M to $9.0M after cash and share payments, though accreted interest expense of $0.84M is a continuing non‑operating drag. Future filings will show how mix shifts between Platforms and Transactions affect margin sustainability.
Key Figures
Key Terms
deferred revenue financial
contingent earnout liability financial
stock-based compensation expense financial
vertical software-as-a-service (SaaS) financial
goodwill financial
Monte Carlo simulation financial
Earnings Snapshot
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
For the transition period from _____________ to _____________
Commission File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class | | Trading Symbol(s) | | Name of each Exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
Title of Class | | Number of Shares Outstanding on May 8, 2026 |
Common Stock, $0.001 par value |
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1 In November 2019, we became a fully remote company. Accordingly, we do not currently have principal executive offices. Our mailing address is 10624 S. Eastern Ave., Ste. A-614, Henderson, NV 89052.
Table of Contents
TABLE OF CONTENTS
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 | 24 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 37 |
Item 4. Controls and Procedures | 37 |
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PART II — OTHER INFORMATION | 38 |
Item 1A. Risk Factors | 38 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 38 |
Item 5. Other Information | 39 |
Item 6. Exhibits | 40 |
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SIGNATURES | 41 |
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PART 1 — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
| | March 31, | | June 30, | |||
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Assets | | | |||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | |||
Accounts receivable, net of allowance of $ |
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Prepaid expenses and other current assets |
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Prepaid royalties |
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Total current assets |
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Non-current assets: |
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Property and equipment, net of accumulated depreciation of $ |
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Intangible assets, net of accumulated amortization of $ | | | |||||
Goodwill | | | |||||
Deposits and other assets |
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Total assets | $ | | $ | | |||
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable and accrued expenses | $ | | $ | | |||
Deferred revenue, current portion |
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Contingent earnout liability, current portion |
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Total current liabilities |
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Non-current liabilities: |
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Deferred revenue, long-term portion |
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Contingent earnout liability, long-term portion |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock; $ |
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Common stock; $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | | |||
See notes to condensed consolidated financial statements
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Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
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Revenue: |
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Platforms | $ | | $ | | $ | | $ | | |||||
Transactions |
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Total revenue |
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Cost of revenue: |
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Platforms |
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Transactions |
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Total cost of revenue |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Income from operations |
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Other income |
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Accreted interest expense | ( | — | ( | — | |||||||||
Change in fair value of contingent earnout liability | — | ( | — | ( | |||||||||
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Income (loss) before provision for income taxes |
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Provision for income taxes |
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Net income (loss) | |
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Other comprehensive income (loss): |
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Foreign currency translation |
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Comprehensive income (loss) | $ | | $ | | $ | | $ | ( | |||||
Basic income (loss) per common share: | |||||||||||||
Net income (loss) per share | $ | | $ | | $ | | $ | ( | |||||
Weighted average common shares outstanding | | | | | |||||||||
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Diluted income (loss) per common share: | |||||||||||||
Net income (loss) per share | $ | | $ | | $ | | $ | ( | |||||
Weighted average common shares outstanding | | | | | |||||||||
See notes to condensed consolidated financial statements
4
Table of Contents
Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Nine Months Ended March 31, 2026
(Unaudited)
Additional | Accumulated Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
| | Shares | | Amount | | Capital | | Deficit | | Loss | | Equity | |||||
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Balance, December 31, 2025 |
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Stock options expense |
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Restricted common stock expense | — | — | | — | — | | |||||||||||
Grant of restricted common stock | | | ( | — | — | — | |||||||||||
Repurchase of common stock | ( |
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Common stock issued for Scite earnout payment | | | | — | — | | |||||||||||
Net income for the period |
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Foreign currency translation |
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Balance, March 31, 2026 |
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Balance, July 1, 2025 |
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Stock options expense |
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Restricted common stock expense |
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Grant of restricted common stock | |
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Forfeited restricted common stock | ( | ( | | — | — | — | |||||||||||
Repurchase of common stock |
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Common stock issued upon exercise of stock options |
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Common stock issued for Scite earnout payment |
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Net income for the period |
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Foreign currency translation |
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Balance, March 31, 2026 |
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See notes to condensed consolidated financial statements
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Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
For the Three and Nine Months Ended March 31, 2025
(Unaudited)
Additional | Accumulated Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
| | Shares | | Amount | | Capital | | Deficit | | Loss | | Equity | |||||
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Balance, December 31, 2024 |
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Stock options expense |
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Restricted common stock expense |
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Repurchase of common stock | ( |
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Common stock issued upon exercise of stock options | |
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Net income for the period |
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Foreign currency translation |
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Balance, March 31, 2025 |
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Balance, July 1, 2024 |
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Stock options expense |
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Restricted common stock expense |
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Grant of restricted common stock | |
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Forfeited restricted common stock | ( | ( | | — | — | — | |||||||||||
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Repurchase of common stock |
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Common stock issued upon exercise of stock options |
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Net loss for the period | — |
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Foreign currency translation |
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Balance, March 31, 2025 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
See notes to condensed consolidated financial statements
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Research Solutions, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended | |||||||
March 31, | |||||||
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Cash flow from operating activities: |
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Net income (loss) | $ | | $ | ( | |||
Adjustment to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Stock options expense |
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Restricted common stock expense |
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Accreted interest expense | | — | |||||
Adjustment to contingent earnout liability | — | | |||||
Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Prepaid royalties |
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Accounts payable and accrued expenses |
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Deferred revenue |
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Net cash provided by operating activities |
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Cash flow from investing activities: |
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Purchase of property and equipment |
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Net cash used in investing activities |
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Cash flow from financing activities: |
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Proceeds from the exercise of stock options | | — | |||||
Common stock repurchase | ( | ( | |||||
Payment of contingent acquisition consideration - Scite and FIZ | ( | ( | |||||
Net cash used in financing activities |
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Effect of exchange rate changes |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period | $ | | $ | | |||
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Supplemental disclosures of cash flow information: |
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Cash paid for income taxes | $ | | $ | | |||
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Non-cash investing and financing activities: |
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Contingent consideration accrual on asset acquisition | $ | — | $ | | |||
Common stock issued for Scite earnout payment | $ | | $ | — | |||
See notes to condensed consolidated financial statements
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RESEARCH SOLUTIONS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Organization, Nature of Business and Basis of Presentation
Organization
Research Solutions, Inc. (the “Company,” “Research Solutions,” “we,” “us” or “our”) was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with
Nature of Business
We are a vertical software-as-a-service (“SaaS”) and artificial intelligence (“AI”) company providing software and related services to help research-intensive organizations simplify the research process, save time and money. We offer various software platforms (“Platform” or “Platforms”) that are typically sold to corporate, academic, government and individual researchers as cloud-based SaaS via auto-renewing license agreements. Corporate, academic, and government customers typically sign up under annual or multi-year agreements paid annually in advance. Individual researchers can sign up under an annual or a month-to-month agreement and are typically billed monthly. Our Platforms also facilitate the sale of published scientific, technical, and medical (“STM”) content sold as individual articles (“Transactions”) either stand alone or via one or more of the research Platform solutions we provide. When one or more of the Platform solutions are used to purchase Transactions, customers pay for those transactions through monthly billing or via credit card for individual researchers. In addition, our Platforms facilitate rights and permissions for customers to re-use content, ensuring copyright compliance for research, regulatory and marketing use cases as well as the utilization of content with AI applications and for the training of AI models. Our Platforms enable life science and other research-intensive organizations to simplify their research and development activities through our advanced search (i.e. Discovery Tools), tools to access and buy STM articles required to support their research (i.e. Access), as well as tools that manage that content across the enterprise and on an individual basis (i.e. Manage). The Platforms also include advanced AI (“Generative AI”) based assistants to help researchers understand the quality of the articles they are reviewing, speed up the review process, and to more fully understand how various research papers relate to each other. In addition to STM content, the Platforms provide additional context to the research process by including the ability to search and assimilate a variety of other types of data such as patent, clinical trial, regulatory and competitive intelligence data. They also typically deliver a return on investment to the customer by reducing the amount of time it takes a research organization to find, acquire and manage content, in addition to also driving down the ultimate cost per article and overall research costs over time.
Platforms
Our cloud-based SaaS Platforms consist of proprietary software and Internet-based interfaces sold to customers through an annual or monthly subscription fee. Legacy functionality falls into three areas.
Discovery Tools – Our Scite.ai and Resolute.ai solutions facilitate search (discovery) across virtually all STM articles available. These solutions include basic search solutions and advanced search tools. These tools allow for searching and identifying relevant research and then purchasing that research through one of our other solutions. In addition, these tools increasingly enable users to find insights in other datasets adjacent to STM content, such as clinical trial, patent, life science & medtech regulatory information, competitor and technology landscape insights, in addition to searching the customer’s internal datasets. Scite.ai includes full text search capability on most of the world’s STM content providing better search results and citation information as supporting or contrasting evidence. This powers our AI assistant and literature search engine and gives researchers better insights into any topic. The advanced search solutions are sold through a seat, enterprise, or individual license. These Platforms are deployed as a single, multi-tenant system across our entire customer base. Customers securely access the Platforms through online web interfaces and via web service APIs that enable
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customers to leverage Platform features and functionality from within in-house and third-party software systems. The Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms’ efficiencies in scalability, stability and development costs to fuel rapid innovation and competitive advantage.
Access – Our Article Galaxy® (“AG”) and Article Galaxy Scholar (Academic Library version) (“AGS”) solutions allow for research organizations to load their entitlements (subscriptions, discount or token packages, and their existing content library of articles) and AG/AGS manages those entitlements in the background enabling the researchers to focus on acquiring articles they need quickly and efficiently at the lowest possible cost. When used in conjunction with our Discovery Tools Platforms, customers can initiate orders, route orders based on the lowest cost to acquire, obtain spend and usage reporting, automate authentication, and connect seamlessly to in-house and third-party software systems. In addition, Article Galaxy facilitates rights and permissions for various re-use cases, including the utilization in AI applications and training of AI applications, ensuring copyright compliance for our customers.
Manage – Our References solution offers a comprehensive reference management solution with built-in document delivery capabilities specifically designed to meet the collaboration and security needs of research- intensive organizations. This user-friendly Platform enables researchers to seamlessly organize their literature, collaborate with team members, and access a vast collection of scientific content. By integrating organization tools with instant access to millions of scholarly articles, our References solution streamlines the research workflow and enhances productivity for scientific professionals.
AI models are integral to powering the unique insights our platforms provide as well as the user experience customers enjoy. Natural language processing (“NLP”) and AI models are used to enhance metadata, define connections between topics and content items as well as to generate data and metrics employed to enable users to rapidly identify and understand the value of content they need for their research. We also use state of the art AI models, such as large language models (“LLM”) to include generative AI “assistants” in several parts of the research workflow today and will continually add capability as we move forward. Today we employ generative AI technologies as a basis for our recommendation engine in our Discovery Tools, Access, and Manage Platform solutions. In addition, generative AI based “assistants” in some of our solutions allow the researcher to ask questions about articles, groups of articles (folders), and more. We also have the capability to provide near full text search on STM content in the Scite.ai solution where the publisher gives us the rights to do so. The ability to not only mine an article’s full text but also show snippets of full text is unique to our Company and allows our generative AI assistants to provide highly accurate results with a very low incidence of hallucinations as part of a retrieval augmented generation framework focused just on STM content. We intend to continue investing in our platforms and in our integrations with third-party AI applications, through new product enhancements and expanded dataset coverage.
Our Platforms are generally deployed as a single, multi-tenant system across our entire customer base. Customers securely access the Platforms through online web interfaces and via web service APIs that enable customers to leverage Platform features and functionality from within in-house and third-party software systems. Our Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms efficiencies in scalability, stability and development costs to fuel rapid innovation and to gain a competitive advantage.
Transactions
We provide our researchers with a single source to the universe of published STM content that includes over
Core to many of our Platform solutions is providing our customers with ways to find and download digital versions of STM articles that are critical to their research. Customers submit orders for the articles they need which we
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source and electronically deliver to them generally in under an hour, in most cases in seconds. This service is generally known in the industry as single article delivery or document delivery. We also obtain the necessary permission licenses from the content publisher or other rights holder so that our customer’s use complies with applicable copyright laws and we are expanding these services to include the use of content in AI applications and for the training of AI models. We have arrangements with hundreds of content publishers that allow us to distribute their content. The majority of these publishers provide us with electronic access to their content, which allows us to electronically deliver single articles to our customers often in a matter of seconds. While a vast majority of the articles are available in electronic form, the Company also has workflows to deliver older paper-based articles through relationships we have built with libraries around the world.
Principles of Consolidation
The accompanying condensed consolidated financial statements are consolidated and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the SEC. The condensed consolidated balance sheet as of June 30, 2025 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.
Note 2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.
These estimates and assumptions include estimates for reserves of uncollectible accounts, the valuation of goodwill and intangible assets related to the Company’s acquisitions, accruals for contingent earnout liabilities, assumptions made in valuing equity instruments issued for services or acquisitions, and realization of deferred tax assets.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. The Company extends credit based on an evaluation of the customer’s financial condition, generally without
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collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required.
Cash denominated in Euros, British Pounds and Japanese Yen with an aggregate US Dollar equivalent of $
The Company has no customers that represent 10% of revenue or more for the three and nine months ended March 31, 2026 and 2025.
The Company has no customers that accounted for greater than 10% of accounts receivable at March 31, 2026 and June 30, 2025.
The following table summarizes vendor concentrations for content cost:
Three Months Ended |
| Nine Months Ended |
| ||||||||||
March 31, |
| March 31, |
| ||||||||||
| 2026 | | | 2025 | 2026 | | | 2025 | |||||
Vendor A | | % | | % | | % | | % | |||||
Vendor B | | % | | % | | % | | % | |||||
Software Costs
Based on its nature, the Company’s software development costs are expensed as incurred. The finalization of the Company’s project development process precipitates the rapid commercialization and deployment of new products and enhancements. The Company continuously reviews its projects, processes and the nature of its software development costs to determine if there are changes that would meet the requirements for capitalization under Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software.
Revenue Recognition
The Company accounts for revenue in accordance with Financial Accounting Standard Board’s (“FASB”) ASC Topic 606, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company derives its revenues from
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The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations in the contract; and |
| ● | recognize revenue as the performance obligation is satisfied. |
Platforms
We charge a subscription fee that allows customers to access and utilize certain premium features of our Platforms. 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
We charge a transactional service fee for the electronic delivery of single articles, and a corresponding copyright fee for the permitted use of the content. We recognize revenue from single article delivery services upon delivery to the customer provided all other revenue recognition criteria have been met.
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Revenue by Geographical Region
The following table summarizes revenue by geographical region:
Three Months Ended |
| |||||||||||
March 31, |
| |||||||||||
2026 |
| 2025 | ||||||||||
United States | $ | | | | % | $ | | | % | |||
Europe |
| |
| | % |
| |
| | % | ||
Rest of World |
| |
| | % |
| |
| | % | ||
Total | $ | |
| | % | $ | |
| | % | ||
Nine Months Ended | ||||||||||||
March 31, | ||||||||||||
2026 |
| 2025 | ||||||||||
United States | $ | | | | % | $ | | | % | |||
Europe |
| |
| | % |
| |
| | % | ||
Rest of World |
| |
| | % |
| |
| | % | ||
Total | $ | |
| | % | $ | |
| | % | ||
Accounts Receivable, Net by Geographical Region
The following table summarizes accounts receivable, net by geographical region:
As of March 31, 2026 |
| As of June 30, 2025 | ||||||||||
United States | | $ | | | | % | $ | | | % | ||
Europe |
| |
| | % |
| |
| | % | ||
Rest of World |
| |
| | % |
| |
| | % | ||
Total | $ | |
| | % | $ | |
| | % | ||
Business Combinations
The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.
Intangible Assets
Amortizable finite-lived identifiable intangible assets consist of developed technology and customer relationships acquired in the acquisition of ResoluteAI effective July 28, 2023 and Scite effective December 1, 2023, and are stated at cost less accumulated amortization. The developed technology and customer relationships are being amortized over the estimated average useful lives of
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Goodwill
Goodwill consists of the excess of the cost of ResoluteAI and Scite over the fair value of amounts assigned to assets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. The Company operates in a single reporting unit at the consolidated level. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform an annual impairment testing for its reporting unit on June 30 of each fiscal year.
Deferred Revenue
Contract liabilities, such as deferred revenue, exist where the Company has the obligation to transfer services to a customer for which the entity has received consideration, or when the consideration is due, from the customer.
Cash payments received or due in advance of performance are recorded as deferred revenue. Deferred revenue is primarily comprised of cloud-based software subscriptions which are generally billed in advance. The deferred revenue balance is presented as a short-term and long-term liability on the Company's condensed consolidated balance sheets based on when the revenue is expected to be recognized.
Cost of Revenue
Platforms
Cost of Platform revenue consists primarily of personnel costs of our operations team, and managed hosting providers and other third-party service and data providers.
Transactions
Cost of Transaction revenue consists primarily of the respective copyright fee for the permitted use of the content, less a discount in most cases, and to a much lesser extent, personnel costs of our operations team and third-party service providers.
Segment Reporting
The Company operates in a segment which derives its revenue from subscription fees from its cloud-based SaaS Platforms and transactional service fees for the electronic delivery of singles articles, and a corresponding copyright fee for the permitted use of the content and it is based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM.
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The CODM regularly reviews revenue, certain significant expense categories, net income (loss) and select balance sheet items in evaluating segment performance. The significant segment expense categories and other segment items provided to the CODM and included in the measure of segment profit or loss are presented below.
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
2026 | | 2025 | 2026 | | 2025 | |||||||
Revenue | $ | | $ | | $ | | $ | | ||||
Cost of revenue |
| |
| |
| |
| | ||||
Gross profit |
| |
| |
| |
| | ||||
Gross profit margin |
|
|
|
| ||||||||
Selling, general and administrative expenses: |
|
| ||||||||||
Sales and marketing | | | | | ||||||||
Technology and product development |
| |
| |
| |
| | ||||
General and administrative |
| |
| |
| |
| | ||||
Stock-based compensation expense |
| |
| |
| |
| | ||||
Foreign currency transaction loss (gain) |
| |
| ( |
| |
| ( | ||||
Total selling, general and administrative expenses |
| |
| |
| |
| | ||||
Depreciation and amortization | | | | | ||||||||
Net income (loss) | $ | | $ | | $ | | $ | ( | ||||
Segment net income (loss) includes other income, accreted interest expense, change in fair value of contingent earnout liability and income taxes.
The CODM also reviews the following balance sheet items at period-end as part of performance monitoring and resource allocation decisions:
As of March 31, 2026 | | As of June 30, 2025 | ||||
Cash and cash equivalents | $ | | | $ | | |
Current assets, excluding cash and cash equivalents |
| |
| | ||
Long term assets |
| |
| | ||
Total segment assets | $ | |
| $ | | |
The Company applied the provisions of Accounting Standards Update (“ASU”) 2023-07 retrospectively and has included comparative information for the three and nine months ended March 31, 2025. Because the Company operates as a reportable segment, the amounts above reconcile directly to the corresponding condensed consolidated financial statement line items. There was no impact on previously reported consolidated net income (loss), financial position or cash flows.
Stock-Based Compensation
The Company periodically issues stock options and restricted stock awards to employees and non-employees for services. The Company accounts for such grants issued and vesting based on ASC 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the requisite service period for awards subject to time vesting conditions and the graded tranche basis for awards subject to market vesting conditions. Forfeitures are accounted for as they occur. The Company recognizes the fair value of stock-based compensation within its condensed consolidated statements of operations and comprehensive income with classification depending on the nature of the services rendered.
Under ASC 718, repurchase or cancellation of equity awards, the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost.
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Foreign Currency
The accompanying condensed consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the costs of Reprints Desk Latin America and ResSoL LA are in Mexican Pesos. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.
Gains and losses from foreign currency transactions, which result from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated, are included in selling, general and administrative expenses and amounted to losses of $
Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period, excluding shares of unvested restricted common stock. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted. Potential common shares are excluded from the computation when their effect is antidilutive.
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The following table reconciles the numerators and denominators used in the computations of both basic and diluted net income (loss) per share:
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income (loss) available to common shareholders | $ | | $ | | $ | | $ | ( | ||||
Weighted average commons shares - basic |
| |
| |
| |
| | ||||
Dilutive effect of outstanding stock options |
| |
| |
| |
| — | ||||
Dilutive effect of unvested restricted common stock |
| |
| |
| |
| — | ||||
Weighted average commons shares - diluted |
| |
| |
| |
| | ||||
Net income (loss) per common share: |
|
| ||||||||||
Basic | $ | $ | $ | $ | ( | |||||||
Diluted | $ | $ | $ | $ | ( | |||||||
Weighted average stock options excluded due to anti-dilution were
Fair Value of Financial Instruments
Under FASB ASC Topic 820, Fair Value Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.
Level 3 – Unobservable inputs based on the Company’s assumptions.
The Company is required to use observable market data if such data is available without undue cost and effort.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of March 31, 2026 and June 30, 2025:
As of March 31, 2026 | As of June 30, 2025 | |||||||||||||||||||||||
| Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total | |||||||||
| |
| |
| |
| |
| |
| |
| |
| | |||||||||
Assets | ||||||||||||||||||||||||
Total assets | $ | — | $ | — | $ | — |
| $ | — | $ | — | $ | — | $ | — |
| $ | — | ||||||
Liabilities | ||||||||||||||||||||||||
Contingent earnout liability | $ | — | — | $ | | $ | | $ | — | — | $ | | $ | | ||||||||||
Total liabilities | $ | — | $ | — | $ | |
| $ | | $ | — | $ | — | $ | |
| $ | | ||||||
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On December 1, 2023, the Company acquired
Our contingent earnout liability related to the Scite acquisition is in the “Level 3” category for valuation purposes. As of March 31, 2026 and June 30, 2025, the contingent earnout liability fair value was estimated using the ending business to consumer annual recurring revenue figures as of May 30, 2025 and a
On July 2, 2025, the Company finalized the calculation of the earnout for former shareholders of Scite at $
The following table summarizes the Company’s contingent earnout liability activity:
Three Months Ended | Nine Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Beginning balance, contingent earnout liability | $ | | $ | | $ | | $ | | ||||
| — |
| |
| — |
| | |||||
Accreted interest expense |
| |
| — |
| |
| — | ||||
Scite earnout payments in cash |
| ( |
| — |
| ( |
| — | ||||
Scite earnout payments in shares of common stock |
| ( |
| — |
| ( |
| — | ||||
Ending balance, contingent earnout liability | $ | | $ | | $ | | $ | | ||||
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments.
Recently Issued Accounting Pronouncements
In December 2023, the FASB amended ASC 740, Income Taxes (issued under ASU 2023-09, “Improvements to Income Tax Disclosures”). This ASU requires additional disclosures related to the rate reconciliation, income taxes paid and other amendments intended to enhance effectiveness and comparability. The amendment is effective for the Company beginning with its fiscal year 2026 annual disclosures. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on its annual disclosures.
In November 2024, the FASB issued ASU No. 2024-03 “Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40)” which requires disclosure each reporting period, in the notes to the financial statements, of specified information about certain costs and expenses. The new requirements will be effective for the Company for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its annual disclosures.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
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Note 3. Line of Credit
On April 15, 2024, the Company entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender. Pursuant to the PNC Loan Agreement, the Company entered into a Revolving Line of Credit Note (the “PNC Note”) with PNC, which provides for a $
Note 4. Stockholders’ Equity
Stock Options
In December 2007, we established the 2007 Equity Compensation Plan (the “2007 Plan”) and in November 2017 we established the 2017 Omnibus Incentive Plan (the “2017 Plan”), collectively (the “Plans”). The Plans were approved by our board of directors and stockholders. The purpose of the Plans is to grant stock and options to purchase our common stock, and other incentive awards, to our employees, directors and key consultants. On November 10, 2016, the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2007 Plan increased from
The following table summarizes vested and unvested stock option activity:
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, 2025 |
| |
| $ | |
| |
| $ | |
| |
| $ | |
Granted |
| | |
| — | — |
| | | ||||||
Options vesting |
| — | — |
| | |
| ( | | ||||||
Exercised |
| ( | |
| ( | |
| — | — | ||||||
Forfeited |
| — | — |
| — | — |
| — | — | ||||||
Outstanding at March 31, 2026 |
| | $ | |
| | $ | |
| | $ | | |||
The weighted average remaining contractual life of all options outstanding as of March 31, 2026 was years. The remaining contractual life for options vested and exercisable at March 31, 2026 was years. Furthermore, the aggregate intrinsic value of options outstanding as of March 31, 2026 was $
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$
During the nine months ended March 31, 2026, the Company granted
The following table presents the assumptions used to estimate the fair values based upon a Black-Scholes option pricing model of the stock options granted during the nine months ended March 31, 2026 and 2025.
Nine Months Ended |
| |||||
March 31, | ||||||
| 2026 | | 2025 | |||
Expected dividend yield |
| — | % | — | % | |
Risk-free interest rate |
| | % | | % | |
Expected life (in years) |
|
| ||||
Expected volatility |
| | % | | % | |
The following table presents the information regarding stock options outstanding and exercisable as of March 31, 2026:
Option | | | Remaining | | |||
Exercise | Options | Contractual | Options | ||||
Price | Outstanding | Life (in years) | Exercisable | ||||
$ |
| |
|
| | ||
| |
|
| | |||
| | ||||||
Total |
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Restricted Common Stock
During the nine months ended March 31, 2026, the Company issued an additional
During the nine months ended March 31, 2025, the Company issued an additional
• |
•
•
•
•
Upon a change of control, vesting will accelerate with respect to that portion of the award that would vest if the target 30-day VWAP was achieved at the level above the per share price in such change of control transaction. For example, if we granted an award of
As the vesting of the
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The following table summarizes restricted common stock activity:
| | | | Weighted | ||||
Average | ||||||||
Number of | Grant Date | |||||||
Shares | Fair Value | Fair Value | ||||||
Non-vested, June 30, 2025 |
| | $ | | $ | | ||
Granted |
| |
| |
| | ||
Vested |
| ( |
| ( |
| | ||
Forfeited |
| ( |
| ( |
| | ||
Non-vested, March 31, 2026 |
| | $ | | $ | | ||
Common Stock Repurchases
Effective as of March 19, 2024, the Compensation Committee of our board of directors authorized the repurchase, on the last day of each trading window during which the outstanding awards remain outstanding and otherwise in accordance with our insider trading policies, of an aggregate value not exceeding $
During the three months ended March 31, 2026, the Company repurchased
During the three months ended March 31, 2025, the Company repurchased
Shares repurchased are retired and deducted from common stock for par value and from additional paid in capital for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares.
Note 5. Contingencies
Inflation Risk
The Company does not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy. However, there is a risk that the Company’s operating costs could become subject to inflationary and interest rate pressures in the future, which would have the effect of increasing the Company’s operating costs, and which would put additional stress on the Company’s working capital resources.
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Note 6. Income Taxes
The effective tax rate for the three months ended March 31, 2026 and 2025 was
Note 7. Subsequent Events
On May 1, 2026, the Company completed the fourth installment payment of cash and common stock associated with the earnout for the former shareholders of Scite, which consisted of cash of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Notice Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended March 31, 2026 and 2025 should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.
Overview
Research Solutions was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with five wholly owned subsidiaries as of March 31, 2026: Reprints Desk, Inc., a Delaware corporation, including its wholly owned subsidiary Resolute Innovation, Inc., a Delaware corporation, Scite, LLC, a Delaware limited liability company, Reprints Desk Latin America S. de R.L. de C.V., an entity organized under the laws of Mexico, and RESSOL LA, S. DE R.L. DE C.V., an entity organized under the laws of Mexico.
We are a vertical software-as-a-service (“SaaS”) and artificial intelligence (“AI”) company providing software and related services to help research-intensive organizations simplify the research process, save time and money. We offer various software platforms (“Platform” or “Platforms”) that are typically sold to corporate, academic, government and individual researchers as cloud-based SaaS via auto-renewing license agreements. Corporate, academic, and government customers typically sign up under annual or multi-year agreements paid annually in advance. Individual researchers can sign up under an annual or a month-to-month agreement and are typically billed monthly. Our Platforms also facilitate the sale of published scientific, technical, and medical (“STM”) content sold as individual articles (“Transactions”) either stand alone or via one or more of the research Platform solutions we provide. When one or more of the Platform solutions are used to purchase Transactions, customers pay for those transactions through monthly billing or via credit card for individual researchers. In addition, our Platforms facilitate rights and permissions for customers to re-use content, ensuring copyright compliance for research, regulatory and marketing use cases as well as the utilization of content with AI applications and for the training of AI models. Our Platforms enable life science and other research-intensive organizations to simplify their research and development activities through our advanced search (i.e. Discovery Tools), tools to access and buy STM articles required to support their research (i.e. Access), as well as tools that manage that content across the enterprise and on an individual basis (i.e. Manage). The Platforms also include advanced AI (“Generative AI”) based assistants to help researchers understand the quality of the articles they are reviewing, speed up the review process, and to more fully understand how various research papers relate to each other. In addition to STM content, the Platforms provide additional context to the research process by including the ability to search and assimilate a variety of other types of data such as patent, clinical trial, regulatory and competitive intelligence data. They also typically deliver a return on investment to the customer by reducing the amount of time it takes a research organization to find, acquire and manage content, in addition to also driving down the ultimate cost per article and overall research costs over time.
Platforms
Our cloud-based SaaS Platforms consist of proprietary software and Internet-based interfaces sold to customers through an annual or monthly subscription fee. Legacy functionality falls into three areas.
Discovery Tools – Our Scite.ai and Resolute.ai solutions facilitate search (discovery) across virtually all STM articles available. These solutions include basic search solutions and advanced search tools. These tools allow for searching and identifying relevant research and then purchasing that research through one of our other
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solutions. In addition, these tools increasingly enable users to find insights in other datasets adjacent to STM content, such as clinical trial, patent, life science & medtech regulatory information, competitor and technology landscape insights, in addition to searching the customer’s internal datasets. Scite.ai includes full text search capability on most of the world’s STM content providing better search results and citation information as supporting or contrasting evidence. This powers our AI assistant and literature search engine and gives researchers better insights into any topic. The advanced search solutions are sold through a seat, enterprise, or individual license. These Platforms are deployed as a single, multi-tenant system across our entire customer base. Customers securely access the Platforms through online web interfaces and via web service APIs that enable customers to leverage Platform features and functionality from within in-house and third-party software systems. The Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms’ efficiencies in scalability, stability and development costs to fuel rapid innovation and competitive advantage.
Access – Our Article Galaxy® (“AG”) and Article Galaxy Scholar (Academic Library version) (“AGS”) solutions allow for research organizations to load their entitlements (subscriptions, discount or token packages, and their existing content library of articles) and AG/AGS manages those entitlements in the background enabling the researchers to focus on acquiring articles they need quickly and efficiently at the lowest possible cost. When used in conjunction with our Discovery Tools Platforms, customers can initiate orders, route orders based on the lowest cost to acquire, obtain spend and usage reporting, automate authentication, and connect seamlessly to in-house and third-party software systems. In addition, Article Galaxy facilitates rights and permissions for various re-use cases, including the utilization in AI applications and training of AI applications, ensuring copyright compliance for our customers.
Manage – Our References solution offers a comprehensive reference management solution with built-in document delivery capabilities specifically designed to meet the collaboration and security needs of research- intensive organizations. This user-friendly Platform enables researchers to seamlessly organize their literature, collaborate with team members, and access a vast collection of scientific content. By integrating organization tools with instant access to millions of scholarly articles, our References solution streamlines the research workflow and enhances productivity for scientific professionals.
AI models are integral to powering the unique insights our platforms provide as well as the user experience customers enjoy. Natural language processing (“NLP”) and AI models are used to enhance metadata, define connections between topics and content items as well as to generate data and metrics employed to enable users to rapidly identify and understand the value of content they need for their research. We also use state of the art AI models, such as large language models (“LLP”) to include generative AI “assistants” in several parts of the research workflow today and will continually add capability as we move forward. Today we employ generative AI technologies as a basis for our recommendation engine in our Discovery Tools, Access, and Manage Platform solutions. In addition, generative AI based “assistants” in some of our solutions allow the researcher to ask questions about articles, groups of articles (folders), and more. We also have the capability to provide near full text search on STM content in the Scite.ai solution where the publisher gives us the rights to do so. The ability to not only mine an article’s full text but also show snippets of full text is unique to our Company and allows our generative AI assistants to provide highly accurate results with a very low incidence of hallucinations as part of a retrieval augmented generation framework focused just on STM content. We intend to continue investing in our platforms and in our integrations with third-party AI applications, through new product enhancements and expanded dataset coverage.
Our Platforms are generally deployed as a single, multi-tenant system across our entire customer base. Customers securely access the Platforms through online web interfaces and via web service APIs that enable customers to leverage Platform features and functionality from within in-house and third-party software systems. Our Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms efficiencies in scalability, stability and development costs to fuel rapid innovation and to gain a competitive advantage.
Transactions
We provide our researchers with a single source to the universe of published STM content that includes over 200 million existing STM journal articles for instant download, 50 million journal articles for rent, 10 million online book chapters, and 45 million only in print journal articles. In addition, we add between 2 to 4 million newly published STM
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articles each year. STM content is rented or sold to our customers on a per transaction basis. Researchers and knowledge workers in life science and other research-intensive organizations generally require single copies of published STM journal articles for use in their research activities. These individuals are our primary users and while they typically purchase the articles via one of our Platform solutions, we do have some customers that just order articles from us on behalf of end-users in their organizations.
Core to many of our Platform solutions is providing our customers with ways to find and download digital versions of STM articles that are critical to their research. Customers submit orders for the articles they need which we source and electronically deliver to them generally in under an hour, in most cases in seconds. This service is generally known in the industry as single article delivery or document delivery. We also obtain the necessary permission licenses from the content publisher or other rights holder so that our customer’s use complies with applicable copyright laws and we are expanding these services to include the use of content in AI applications and for the training of AI models. We have arrangements with hundreds of content publishers that allow us to distribute their content. The majority of these publishers provide us with electronic access to their content, which allows us to electronically deliver single articles to our customers often in a matter of seconds. While a vast majority of the articles are available in electronic form, the Company also has workflows to deliver older paper-based articles through relationships we have built with libraries around the world.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.
The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our condensed consolidated financial statements because they inherently involve significant judgments and uncertainties.
Software Costs
Based on its nature, our software development costs are expensed as incurred. The finalization of our project development process precipitates the rapid commercialization and deployment of new products and enhancements. We continuously review our projects, processes and the nature of our software development costs to determine if there are changes that would meet the requirements for capitalization under ASC 350-40, Internal-Use Software.
Revenue Recognition
We account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We derive our revenues from two sources: annual licenses that allow customers to access and utilize certain premium features of our
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cloud-based SaaS research intelligence platforms and the transactional sale of STM content managed, sourced and delivered through the Platform.
We apply the following five steps in order to determine the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our agreements:
| ● | identify the contract with a customer; |
| ● | identify the performance obligations in the contract; |
| ● | determine the transaction price; |
| ● | allocate the transaction price to performance obligations in the contract; and |
| ● | recognize revenue as the performance obligation is satisfied. |
Platforms
We charge a subscription fee that allows customers to access and utilize certain premium features of our Platforms. 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
We charge a transactional service fee for the electronic delivery of single articles, and a corresponding copyright fee for the permitted use of the content. We recognize revenue from single article delivery services upon delivery to the customer provided all other revenue recognition criteria have been met.
Stock-Based Compensation
We periodically issue stock options, warrants and restricted stock to employees and non-employees for services, in capital raising transactions, and for financing costs. We account for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. We estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing model. Depending on the type of restricted stock award, the fair value of our restricted stock is estimated based on the market price of our common stock on the date of grant or with the assistance of a valuation specialist, using the Monte Carlo simulations on a binomial model with a derived service period. We recognize compensation expense on the straight-line basis over the requisite service period for awards subject to time vesting conditions and the graded tranche basis for awards subject to market vesting conditions. Forfeitures are accounted for as they occur. We recognize stock-based compensation within the condensed consolidated statements of operations and comprehensive income with classification depending on the nature of the services rendered.
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Under ASC 718, repurchase or cancellation of equity awards, the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost.
Allowance for Credit Losses
Our trade accounts receivable are recorded at amounts billed to customers and presented on the consolidated balance sheet net of the allowance for estimated credit losses, and typically due within 30 days. We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations to us, we estimate and record a specific reserve for bad debts, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses, our forecast and an overall assessment of trade accounts receivable outstanding. We established an allowance for doubtful accounts of $94,234 and $182,324 as of March 31, 2026 and June 30, 2025, respectively.
Foreign Currency
The accompanying condensed consolidated financial statements are presented in United States dollars, the functional currency of our company. Capital accounts of foreign subsidiaries are translated into US dollars from foreign currencies at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the costs of Reprints Desk Latin America and ResSol LA are in Mexican Pesos. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities.
Recently Issued Accounting Pronouncements
Please refer to footnote 2 to the condensed consolidated financial statements contained elsewhere in this Form 10-Q for a discussion of Recently Issued Accounting Pronouncements.
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Comparison of the Three and Nine Months Ended March 31, 2026 and 2025
Results of Operations
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 5,160,565 | $ | 4,839,929 | $ | 320,636 |
| 6.6 | % | ||||
Transactions |
| 6,960,996 |
| 7,821,434 |
| (860,438) |
| (11.0) | % | ||||
Total revenue |
| 12,121,561 |
| 12,661,363 |
| (539,802) |
| (4.3) | % | ||||
Cost of revenue: |
| |
| |
| |
| | |||||
Platforms |
| 703,669 |
| 610,306 |
| 93,363 |
| 15.3 | % | ||||
Transactions |
| 5,152,360 |
| 5,783,977 |
| (631,617) |
| (10.9) | % | ||||
Total cost of revenue |
| 5,856,029 |
| 6,394,283 |
| (538,254) |
| (8.4) | % | ||||
Gross profit: |
| |
| |
| |
| | |||||
Platforms |
| 4,456,896 |
| 4,229,623 |
| 227,273 |
| 5.4 | % | ||||
Transactions |
| 1,808,636 |
| 2,037,457 |
| (228,821) |
| (11.2) | % | ||||
Total gross profit |
| 6,265,532 |
| 6,267,080 |
| (1,548) |
| — | % | ||||
Operating expenses: |
| |
| |
| |
| | |||||
Sales and marketing |
| 1,508,897 |
| 1,607,678 |
| (98,781) |
| (6.1) | % | ||||
Technology and product development |
| 1,513,074 |
| 1,394,936 |
| 118,138 |
| 8.5 | % | ||||
General and administrative |
| 1,625,041 |
| 1,845,411 |
| (220,370) |
| (11.9) | % | ||||
Depreciation and amortization |
| 312,402 |
| 312,013 |
| 389 |
| 0.1 | % | ||||
Stock-based compensation expense |
| 248,608 |
| 594,639 |
| (346,031) |
| (58.2) | % | ||||
Foreign currency transaction loss (gain) |
| 12,529 |
| (44,519) |
| 57,048 |
| 128.1 | % | ||||
Total operating expenses |
| 5,220,551 |
| 5,710,158 |
| (489,607) |
| (8.6) | % | ||||
Income from operations |
| 1,044,981 |
| 556,922 |
| 488,059 |
| 87.6 | % | ||||
Other income |
| 83,919 |
| 78,868 |
| 5,051 |
| 6.4 | % | ||||
Accreted interest expense | (246,526) | — | (246,526) |
| — | % | |||||||
Change in fair value of contingent earnout liability |
| — |
| (405,910) |
| 405,910 |
| 100.0 | % | ||||
Income before provision for income taxes |
| 882,374 |
| 229,880 |
| 652,494 |
| 283.8 | % | ||||
Provision for income taxes |
| (22,168) |
| (13,410) |
| (8,758) |
| (65.3) | % | ||||
Net income | $ | 860,206 | $ | 216,470 |
| 643,736 |
| 297.4 | % | ||||
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Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 15,506,250 | $ | 13,770,831 | $ | 1,735,419 |
| 12.6 | % | ||||
Transactions |
| 20,720,147 |
| 22,849,233 |
| (2,129,086) |
| (9.3) | % | ||||
Total revenue |
| 36,226,397 |
| 36,620,064 |
| (393,667) |
| (1.1) | % | ||||
Cost of revenue: |
| |
| |
| |
| | |||||
Platforms |
| 1,936,705 |
| 1,777,315 |
| 159,390 |
| 9.0 | % | ||||
Transactions |
| 15,621,912 |
| 16,988,700 |
| (1,366,788) |
| (8.0) | % | ||||
Total cost of revenue |
| 17,558,617 |
| 18,766,015 |
| (1,207,398) |
| (6.4) | % | ||||
Gross profit: |
| |
| |
| |
| | |||||
Platforms |
| 13,569,545 |
| 11,993,516 |
| 1,576,029 |
| 13.1 | % | ||||
Transactions |
| 5,098,235 |
| 5,860,533 |
| (762,298) |
| (13.0) | % | ||||
Total gross profit |
| 18,667,780 |
| 17,854,049 |
| 813,731 |
| 4.6 | % | ||||
Operating expenses: |
| |
| |
| |
| | |||||
Sales and marketing |
| 4,824,319 |
| 4,141,172 |
| 683,147 |
| 16.5 | % | ||||
Technology and product development |
| 4,525,646 |
| 4,274,543 |
| 251,103 |
| 5.9 | % | ||||
General and administrative |
| 4,920,996 |
| 5,783,788 |
| (862,792) |
| (14.9) | % | ||||
Depreciation and amortization |
| 944,893 |
| 930,341 |
| 14,552 |
| 1.6 | % | ||||
Stock-based compensation expense |
| 674,539 |
| 1,546,950 |
| (872,411) |
| (56.4) | % | ||||
Foreign currency transaction loss (gain) |
| 31,385 |
| (119,205) |
| 150,590 |
| 126.3 | % | ||||
Total operating expenses |
| 15,921,778 |
| 16,557,589 |
| (635,811) |
| (3.8) | % | ||||
Income from operations |
| 2,746,002 |
| 1,296,460 |
| 1,449,542 |
| 111.8 | % | ||||
Other income | 305,897 |
| 496,392 | (190,495) | (38.4) | % | |||||||
Accreted interest expense | (843,129) | — | (843,129) | — | % | ||||||||
Change in fair value of contingent earnout liability |
| — |
| (2,812,796) |
| 2,812,796 |
| 100.0 | % | ||||
Income (loss) before provision for income taxes |
| 2,208,770 |
| (1,019,944) |
| 3,228,714 |
| 316.6 | % | ||||
Provision for income taxes |
| (52,258) |
| (74,816) |
| 22,558 |
| 30.2 | % | ||||
Net income (loss) | $ | 2,156,512 | $ | (1,094,760) |
| 3,251,272 |
| 297.0 | % | ||||
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Revenue
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 5,160,565 | $ | 4,839,929 | $ | 320,636 |
| 6.6 | % | ||||
Transactions |
| 6,960,996 |
| 7,821,434 |
| (860,438) |
| (11.0) | % | ||||
Total revenue | $ | 12,121,561 | $ | 12,661,363 | $ | (539,802) |
| (4.3) | % | ||||
Total revenue decreased $539,802, or 4.3%, for the three months ended March 31, 2026 compared to the prior year, due to the following:
Category | | Impact | Key Drivers | |||
Platforms |
| ↑ | $ | 320,636 | Increased due to additional deployments to new and existing customers and expansion from existing customers, including cross-sell revenue of the Scite product into existing Article Galaxy customers. 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 |
| ↓ | $ | 860,438 | Decreased primarily due to lower paid order volume. | |
Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 15,506,250 | $ | 13,770,831 | $ | 1,735,419 |
| 12.6 | % | ||||
Transactions |
| 20,720,147 |
| 22,849,233 |
| (2,129,086) |
| (9.3) | % | ||||
Total revenue | $ | 36,226,397 | $ | 36,620,064 | $ | (393,667) |
| (1.1) | % | ||||
Total revenue decreased $393,667, or 1.1%, for the nine months ended March 31, 2026 compared to the prior year, due to the following:
Category | | Impact | Key Drivers | |||
Platforms |
| ↑ | $ | 1,735,419 | Increased due to additional deployments to new and existing customers and expansion from existing customers, including cross-sell revenue of the Scite product into existing Article Galaxy customers. 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 |
| ↓ | $ | 2,129,086 | Decreased primarily due to lower paid order volume. | |
Cost of Revenue
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Cost of Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 703,669 | $ | 610,306 | $ | 93,363 |
| 15.3 | % | ||||
Transactions |
| 5,152,360 |
| 5,783,977 |
| (631,617) |
| (10.9) | % | ||||
Total cost of revenue | $ | 5,856,029 | $ | 6,394,283 | $ | (538,254) |
| (8.4) | % | ||||
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Three Months Ended |
| |||||||
March 31, | ||||||||
| 2026 | | 2025 | | % Change * |
| ||
As a percentage of revenue: |
| |
| |
| | ||
Platforms |
| 13.6 | % | 12.6 | % | 1.0 | % | |
Transactions |
| 74.0 | % | 74.0 | % | — | % | |
Total |
| 48.3 | % | 50.5 | % | (2.2) | % | |
* | The difference between current and prior period cost of revenue as a percentage of revenue |
Total cost of revenue as a percentage of revenue decreased 2.2%, from 50.5% for the prior year to 48.3%, for the three months ended March 31, 2026.
| Impact as percentage | | ||||
Category | of revenue | Key Drivers | ||||
Platforms |
| ↑ |
| 1.0 | % | Increased primarily due to hosting and technology costs that increased at a proportionally faster pace than revenue. |
Transactions |
| — |
| — | % | No material change. |
Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Cost of Revenue: |
| |
| |
| |
| | |||||
Platforms | $ | 1,936,705 | $ | 1,777,315 | $ | 159,390 |
| 9.0 | % | ||||
Transactions |
| 15,621,912 |
| 16,988,700 |
| (1,366,788) |
| (8.0) | % | ||||
Total cost of revenue | $ | 17,558,617 | $ | 18,766,015 | $ | (1,207,398) |
| (6.4) | % | ||||
Nine Months Ended |
| |||||||
March 31, |
| |||||||
| 2026 | | 2025 | | % Change * |
| ||
As a percentage of revenue: |
| |
| |
| | ||
Platforms |
| 12.5 | % | 12.9 | % | (0.4) | % | |
Transactions |
| 75.4 | % | 74.4 | % | 1.0 | % | |
Total |
| 48.5 | % | 51.2 | % | (2.7) | % | |
* | The difference between current and prior period cost of revenue as a percentage of revenue |
Total cost of revenue as a percentage of revenue decreased 2.7%, from 51.2% for the prior year to 48.5%, for the nine months ended March 31, 2026.
| Impact as percentage | | ||||
Category | of revenue | Key Drivers | ||||
Platforms |
| ↓ |
| 0.4 | % | Decreased primarily due to relatively flat personnel costs compared to increased revenue. |
Transactions |
| ↑ |
| 1.0 | % | Increased primarily due to lower copyright margins. |
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Gross Profit
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Gross Profit: |
| |
| |
| |
| | |||||
Platforms | $ | 4,456,896 | $ | 4,229,623 | $ | 227,273 |
| 5.4 | % | ||||
Transactions |
| 1,808,636 |
| 2,037,457 |
| (228,821) |
| (11.2) | % | ||||
Total gross profit | $ | 6,265,532 | $ | 6,267,080 | $ | (1,548) |
| — | % | ||||
Three Months Ended |
| |||||||
March 31, | ||||||||
| 2026 | | 2025 | | % Change* |
| ||
As a percentage of revenue: |
| |
| |
| | ||
Platforms |
| 86.4 | % | 87.4 | % | (1.0) | % | |
Transactions |
| 26.0 | % | 26.0 | % | — | % | |
Total |
| 51.7 | % | 49.5 | % | 2.2 | % | |
* | The difference between current and prior period gross profit as a percentage of revenue |
Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Gross Profit: |
| |
| |
| |
| | |||||
Platforms | $ | 13,569,545 | $ | 11,993,516 | $ | 1,576,029 |
| 13.1 | % | ||||
Transactions |
| 5,098,235 |
| 5,860,533 |
| (762,298) |
| (13.0) | % | ||||
Total gross profit | $ | 18,667,780 | $ | 17,854,049 | $ | 813,731 |
| 4.6 | % | ||||
Nine Months Ended |
| |||||||
March 31, |
| |||||||
| 2026 | | 2025 | | % Change* |
| ||
As a percentage of revenue: |
| |
| |
| | ||
Platforms |
| 87.5 | % | 87.1 | % | 0.4 | % | |
Transactions |
| 24.6 | % | 25.6 | % | (1.0) | % | |
Total |
| 51.5 | % | 48.8 | % | 2.7 | % | |
* | The difference between current and prior period gross profit as a percentage of revenue |
Operating Expenses
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Operating Expenses: |
| |
| |
| |
| | |||||
Sales and marketing | $ | 1,508,897 | $ | 1,607,678 | $ | (98,781) |
| (6.1) | % | ||||
Technology and product development |
| 1,513,074 |
| 1,394,936 |
| 118,138 |
| 8.5 | % | ||||
General and administrative |
| 1,625,041 |
| 1,845,411 |
| (220,370) |
| (11.9) | % | ||||
Depreciation and amortization |
| 312,402 |
| 312,013 |
| 389 |
| 0.1 | % | ||||
Stock-based compensation expense |
| 248,608 |
| 594,639 |
| (346,031) |
| (58.2) | % | ||||
Foreign currency transaction loss (gain) |
| 12,529 |
| (44,519) |
| 57,048 |
| (128.1) | % | ||||
Total operating expenses | $ | 5,220,551 | $ | 5,710,158 | $ | (489,607) |
| (8.6) | % | ||||
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Table of Contents
Category | | Impact | Key Drivers | |||
Sales and marketing |
| ↓ | $ | 98,781 | Decreased primarily due to lower marketing discretionary advertising spend and lower training expenses, partially offset by greater personnel costs and consulting expenses. | |
Technology and product development |
| ↑ | $ | 118,138 | Increased due to greater software development consulting and dues and subscription expenses, partially offset by lower software development personnel costs. | |
General and administrative |
| ↓ | $ | 220,370 | Decreased primarily due to lower personnel costs and lower consulting and investor relations expenses partially offset by greater professional service and bad debt expenses. | |
Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Operating Expenses: |
| |
| |
| |
| | |||||
Sales and marketing | $ | 4,824,319 | $ | 4,141,172 | $ | 683,147 |
| 16.5 | % | ||||
Technology and product development |
| 4,525,646 |
| 4,274,543 |
| 251,103 |
| 5.9 | % | ||||
General and administrative |
| 4,920,996 |
| 5,783,788 |
| (862,792) |
| (14.9) | % | ||||
Depreciation and amortization |
| 944,893 |
| 930,341 |
| 14,552 |
| 1.6 | % | ||||
Stock-based compensation expense |
| 674,539 |
| 1,546,950 |
| (872,411) |
| (56.4) | % | ||||
Foreign currency transaction loss (gain) |
| 31,385 |
| (119,205) |
| 150,590 |
| 126.3 | % | ||||
Total operating expenses | $ | 15,921,778 | $ | 16,557,589 | $ | (635,811) |
| (3.8) | % | ||||
Category | | Impact | Key Drivers | |||
Sales and marketing |
| ↑ | $ | 683,147 | Increased primarily due to greater personnel costs, consulting expenses and marketing discretionary advertising spend, partially offset by lower training expenses. | |
Technology and product development |
| ↑ | $ | 251,103 | Increased due to greater software development consulting and dues and subscription expenses, partially offset by lower software development personnel costs and recruiting expenses. | |
General and administrative |
| ↓ | $ | 862,792 | Decreased primarily due to lower personnel costs and lower consulting, investor relations, travel, recruiting and bad debt expenses. | |
Net Income
Three Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Net Income (Loss): |
| |
| |
| |
| | |||||
Net income: | $ | 860,206 | $ | 216,470 | $ | 643,736 |
| 297.4 | % | ||||
Net income increased $643,736, or 297.4%, for the three months ended March 31, 2026 compared to the prior year, primarily due to a decrease in operating expenses as described above.
Nine Months Ended March 31, |
| ||||||||||||
| 2026 | | 2025 | | $ Change | | % Change |
| |||||
Net Income (Loss): |
| |
| |
| |
| | |||||
Net income (loss): | $ | 2,156,512 | $ | (1,094,760) | $ | 3,251,272 |
| 297.0 | % | ||||
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Net income increased $3,251,272, or 297%, for the nine months ended March 31, 2026 compared to the prior year, primarily due to a fiscal year 2025 increase in the estimated fair value related to the Scite earn out liability, increased gross profit and a decrease in operating expenses as described above.
Liquidity and Capital Resources
Nine Months Ended March 31, | ||||||
2026 | 2025 | |||||
Consolidated Statements of Cash Flow Data: | | |||||
Net cash provided by operating activities | $ | 3,499,149 | $ | 4,764,251 | ||
Net cash used in investing activities |
| (28,609) |
| (11,571) | ||
Net cash used in financing activities |
| (3,656,148) |
| (999,567) | ||
Effect of exchange rate changes |
| 8,692 |
| (1,137) | ||
Net increase (decrease) in cash and cash equivalents |
| (176,916) |
| 3,751,976 | ||
Cash and cash equivalents, beginning of period |
| 12,227,312 |
| 6,100,031 | ||
Cash and cash equivalents, end of period | $ | 12,050,396 | $ | 9,852,007 | ||
Liquidity
As of March 31, 2026, we had cash and cash equivalents of $12,050,396, compared to $12,227,312 as of June 30, 2025, a decrease of $176,916. This decrease was primarily due to cash used in financing activities partially offset by cash provided by operating activities.
Operating Activities
Net cash provided by operating activities was $3,499,149 for the nine months ended March 31, 2026 and resulted primarily from net income of $2,156,512, an accreted interest expense of $843,129 and an increase in deferred revenue of $459,660, partially offset by a decrease in accounts payable and accrued expenses of $724,921.
Net cash provided by operating activities was $4,764,251 for the nine months ended March 31, 2025 and resulted primarily from an adjustment to the contingent earnout liability of $2,812,796, an increase in deferred revenue of $1,331,920 and restricted common stock expense of $1,400,199, partially offset by an increase in accounts receivable of $754,258.
Investing Activities
Net cash used in investing activities was $28,609 for the nine months ended March 31, 2026 and resulted from the purchase of property and equipment.
Net cash used in investing activities was $11,571 for the nine months ended March 31, 2025 and resulted from the purchase of property and equipment.
Financing Activities
Net cash used in financing activities was $3,656,148 for the nine months ended March 31, 2026 and resulted from the payment of $3,766,263 in contingent acquisition consideration and the repurchase of $47,385 of Company common stock, partially offset by proceeds from the exercise of stock options of $157,500.
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Net cash used in financing activities was $999,567 for the nine months ended March 31, 2025 and resulted from the repurchase of $908,393 of Company common stock and the payment of $91,174 in contingent acquisition consideration.
On April 15, 2024, we entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender. Pursuant to the PNC Loan Agreement, we entered into a Revolving Line of Credit Note (the “PNC Note”) with PNC, which provides for a $500,000 secured revolving line of credit that matures on April 15, 2027 and bears interest annually at the daily SOFR rate plus 2.5%, with accrued interest due and payable monthly. The PNC Note contains customary events of default including, among other things, payment defaults, material misrepresentations, breaches of covenants, revocation of guarantee, certain bankruptcy and insolvency events. There were no outstanding borrowings under the line of credit as of March 31, 2026 and June 30, 2025.
Non-GAAP Measure – Adjusted EBITDA
In addition to our GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income (loss), income (loss) from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income (loss), plus interest expense, other (income) expense including any change in fair value of contingent earnout liability, foreign currency transaction loss (gain), provision for income taxes, depreciation and amortization, and stock-based compensation, when applicable. Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
Set forth below is a reconciliation of Adjusted EBITDA to net income for the three and nine months ended March 31, 2026 and 2025:
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
2026 | | 2025 | | $ Change | % Change | ||||||||
Net income | $ | 860,206 | $ | 216,470 | $ | 643,736 | (297.4) | % | |||||
Add (deduct): |
|
|
| |
| | |||||||
Other expense |
| 162,607 |
| 327,042 |
| (164,435) |
| (50.3) | % | ||||
Foreign currency transaction loss (gain) |
| 12,529 |
| (44,519) |
| 57,048 |
| 128.1 | % | ||||
Provision for income taxes |
| 22,168 |
| 13,410 |
| 8,758 |
| 65.3 | % | ||||
Depreciation and amortization |
| 312,402 |
| 312,013 |
| 389 |
| 0.1 | % | ||||
Stock-based compensation |
| 248,608 |
| 594,639 |
| (346,031) |
| (58.2) | % | ||||
Adjusted EBITDA | $ | 1,618,520 | $ | 1,419,055 | $ | 199,465 | 14.1 | % | |||||
| Nine Months Ended | ||||||||||||
| March 31, | ||||||||||||
2026 | | 2025 | | $ Change | % Change | ||||||||
Net income (loss) | $ | 2,156,512 | $ | (1,094,760) | $ | 3,251,272 | 297.0 | % | |||||
Add (deduct): |
|
|
| |
| | |||||||
Other expense |
| 537,232 |
| 2,316,404 |
| (1,779,172) |
| (76.8) | % | ||||
Foreign currency transaction loss (gain) |
| 31,385 |
| (119,205) |
| 150,590 |
| 126.3 | % | ||||
Provision for income taxes |
| 52,258 |
| 74,816 |
| (22,558) |
| (30.2) | % | ||||
Depreciation and amortization |
| 944,893 |
| 930,341 |
| 14,552 |
| 1.6 | % | ||||
Stock-based compensation |
| 674,539 |
| 1,546,950 |
| (872,411) |
| (56.4) | % | ||||
Adjusted EBITDA | $ | 4,396,819 | $ | 3,654,546 | $ | 742,273 | 20.3 | % | |||||
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We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; and in making compensation decisions and in communications with our board of directors concerning our financial performance. Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following:
| ● | Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
| ● | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| ● | Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and |
| ● | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements. |
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. For purposes of this section, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based upon that evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of March 31, 2026, the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.
Inherent Limitations on the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
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relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control Over Financial Reporting
In addition, our management with the participation of our principal executive officer and principal financial officer have determined that no change in our internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Exchange Act) occurred during the quarter ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Effective as of March 19, 2024, the Compensation Committee of our board of directors authorized the repurchase, on the last day of each trading window during which the outstanding awards remain outstanding and otherwise in accordance with our insider trading policies, of an aggregate value not exceeding $750,000 (the “Repurchase Cap”), in addition to the prior remaining balance of outstanding common stock of $330,774 (at prices no greater than $4.00 per share) (the “Repurchase Price Cap”)) from our employees to satisfy their tax obligations in connection with the vesting of stock incentive awards through the end of fiscal year 2025. Effective as of December 19, 2024, the Compensation Committee of our board of directors authorized an increase in the Repurchase Cap to an aggregate value not exceeding $1,500,000 and the Repurchase Price Cap to a price no greater than $5.50 per share. Effective as of May 6, 2025, the Compensation Committee of our board of directors authorized the repurchase of shares of common stock in satisfaction of tax withholding obligations at any time during a trading window during which outstanding awards remain outstanding and otherwise in accordance with our insider trading policies. The actual number of shares repurchased will be determined by applicable employees in their discretion and will depend on their evaluation of market conditions and other factors. As of June 30, 2025, $162,316 remained under the current authorization to repurchase our outstanding common stock from our employees.
During the three months ended March 31, 2026, we repurchased 3,349 shares of our common stock from employees at an average market price of approximately $2.34 per share for an aggregate amount of $7,836. As of March 31, 2026, $114,931 remains under the current authorization to repurchase our outstanding common stock from our employees.
During the three months ended March 31, 2025, we repurchased 246,707 shares of our common stock from employees at an average market price of approximately $2.85 per share for an aggregate amount of $703,115. As of March 31, 2025, $188,500 remained under the current authorization to repurchase our outstanding common stock from our employees.
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Shares repurchased are retired and deducted from common stock for par value and from additional paid in capital for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares.
The following table summarizes repurchases of our common stock on a monthly basis:
| | | Approximate Dollar Value | |||||
Total Number | Average | of Shares that May Yet Be | ||||||
of Shares | Price Paid | Purchased Under the | ||||||
Period | Purchased1 | per Share | Plans or Programs | |||||
January 1-31, 2026 |
| — |
| — |
| $ | 122,767 | |
February 1-28, 2026 |
| — |
| — |
| $ | 122,767 | |
March 1-31, 2026 |
| 3,349 | $ | 2.34 |
| $ | 114,931 | |
Total |
| 3,349 | $ | 2.34 |
|
| — | |
1 Consists of shares of common stock purchased from an employee to satisfy tax obligations in connection with the vesting of stock incentive awards.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three and nine months ended March 31, 2026,
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Item 6. Exhibits
EXHIBIT INDEX
Incorporated by Reference | ||||||||||
Exhibit | 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 | X | ||||||||
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | X | ||||||||
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) | |||||||||
* Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| RESEARCH SOLUTIONS, INC. | |
|
| |
| By: | /s/ Roy W. Olivier |
|
| Roy W. Olivier |
Date: May 15, 2026 |
| Chief Executive Officer and President (Principal Executive Officer) |
| ||
| By: | /s/ David Kutil |
|
| David Kutil |
Date: May 15, 2026 |
| Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
41