Research Solutions(RSSS) - 2024 Q3 - Quarterly Report

Company Overview - Research Solutions operates five wholly owned subsidiaries as of March 31, 2024, including Reprints Desk, Scite, and Resolute Innovation[109]. - The company provides over 100 million existing STM articles and publishes 2 to 4 million new STM articles each year, facilitating single article delivery in under one hour, often in under one minute[119]. - The company has arrangements with hundreds of content publishers, allowing for rapid electronic delivery of articles while ensuring compliance with copyright laws[120]. Revenue Sources - Revenue is derived from two main sources: annual licenses for cloud-based SaaS platforms and transactional sales of STM content, with revenue recognized upon delivery of services[126]. - The company charges a subscription fee for access to premium features of its platforms, with revenue recognized ratably over the subscription term, typically one year[127]. Financial Performance - Total revenue for Q1 2024 reached $12,115,672, representing a 17.1% increase from$ 10,342,426 in Q1 2023[134]. - Platforms revenue increased by 75.7% to $3,953,403 compared to$ 2,249,632 in the same quarter last year[134]. - Gross profit for Q1 2024 was $5,481,932, a 36.1% increase from$ 4,027,273 in Q1 2023[134]. - Total operating expenses rose to $5,394,269, up 38.5% from$ 3,894,134 in Q1 2023[134]. - Net income for Q1 2024 was $76,301, a decrease of 67.8% from$ 236,842 in Q1 2023[134]. - For the nine months ended March 31, 2024, total revenue was $32,490,385, up 17.1% from$ 27,743,735 in the same period last year[135]. - Platforms revenue for the nine months increased by 51.7% to $9,679,179 compared to$ 6,379,871 in the previous year[135]. - Total gross profit for the nine months was $13,997,300, reflecting a 29.8% increase from$ 10,780,348 in the same period last year[135]. - The company reported a net loss of $(965,370) for the nine months ended March 31, 2024, compared to a net income of$ 195,877 in the same period last year[135]. Operating Expenses - Operating expenses increased by $1,500,135, or 38.5%, for the three months ended March 31, 2024, primarily due to higher sales and marketing costs and technology development expenses[145]. - The company reported a significant increase in personnel costs due to the onboarding from ResoluteAI and Scite transactions, impacting both sales and marketing and technology development expenses[145]. Cash Flow and Investments - Cash and cash equivalents decreased to$ 4,221,424 as of March 31, 2024, down from $13,545,333 as of June 30, 2023, primarily due to cash used in investing activities[150]. - Net cash used in investing activities for the nine months ended March 31, 2024, was$ 10,081,507, mainly from the Scite acquisition of $7,305,493 and the ResoluteAI acquisition of$ 2,718,253[154]. - Net cash used in financing activities for the nine months ended March 31, 2024, was $836,984, resulting from the repurchase of common stock of$ 522,024 and payment of contingent acquisition consideration of $314,960[155]. Adjusted EBITDA and Stock-Based Compensation - Adjusted EBITDA for the nine months ended March 31, 2024, was$ 838,311, a decrease of $355,812 compared to$ 1,194,123 for the same period in 2023[160]. - The company reported an increase in stock-based compensation to $1,729,271 for the nine months ended March 31, 2024, compared to$ 1,264,522 in the prior year[160]. Future Outlook and Risks - Future plans include releasing several new platform solutions to support analysis functions for research organizations[117]. - Inflation has not materially affected operations to date, but there is a risk of increased operating costs due to inflationary pressures in the future[121]. Financial Agreements - The company entered into a new PNC Loan Agreement providing a $500,000 secured revolving line of credit maturing on April 15, 2025[157]. - The company had no outstanding borrowings on its previous line of credit with Silicon Valley Bank at maturity on February 28, 2024[156]. - The company does not have any off-balance sheet arrangements[161].