Research Solutions(RSSS) - 2025 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Condensed Consolidated Financial Statements (Unaudited) These unaudited statements present the company's financial position, operations, and cash flows, highlighting $45.2 million in assets and a $1.1 million net loss Condensed Consolidated Balance Sheets As of March 31, 2025, total assets reached $45.2 million and liabilities $34.0 million, driven by cash and acquisition-related liabilities Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,852,007 | $6,100,031 | | Total current assets | $18,837,091 | $14,690,621 | | Goodwill | $16,372,979 | $16,315,888 | | Total assets | $45,227,380 | $41,859,762 | | Liabilities & Equity | | | | Deferred revenue | $10,355,768 | $9,023,848 | | Contingent earnout liability (current & long-term) | $15,110,910 | $12,298,114 | | Total liabilities | $33,996,250 | $30,165,574 | | Total stockholders' equity | $11,231,130 | $11,694,188 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Total revenue increased to $36.6 million for the nine months ended March 31, 2025, with a $1.1 million net loss due to a non-cash earnout liability charge Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $12,661,363 | $12,115,672 | $36,620,064 | $32,490,385 | | Platform Revenue | $4,839,929 | $3,953,403 | $13,770,831 | $9,679,179 | | Gross Profit | $6,267,080 | $5,481,932 | $17,854,049 | $13,997,300 | | Income (Loss) from Operations | $556,922 | $87,663 | $1,296,460 | ($1,431,286) | | Net Income (Loss) | $216,470 | $76,301 | ($1,094,760) | ($965,370) | | Basic EPS | $0.01 | $0.00 | ($0.04) | ($0.03) | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly increased to $4.8 million for the nine months ended March 31, 2025, primarily due to non-cash adjustments and deferred revenue Cash Flow Summary (Unaudited, Nine Months Ended March 31) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,764,251 | $1,589,791 | | Net cash used in investing activities | ($11,571) | ($10,081,507) | | Net cash used in financing activities | ($999,567) | ($836,984) | | Net increase (decrease) in cash | $3,751,976 | ($9,323,909) | Notes to Condensed Consolidated Financial Statements These notes detail the company's business, accounting policies, and key financial events, including acquisitions, contingent liabilities, and stock repurchases - The company is a vertical software-as-a-service (SaaS) and artificial intelligence (AI) company offering platforms for research-intensive organizations, which include Discovery Tools (Scite.ai, Resolute.ai), Access (Article Galaxy), and Manage (References solution)[17][19][22] - The acquisition of Scite on December 1, 2023, involved a total purchase consideration of approximately $21.1 million, including cash, stock, and a contingent earnout. The fair value of this earnout liability increased from an initial $7.2 million to $15.1 million as of March 31, 2025[95][96] - The company has a stock repurchase program, authorized by the Board's Compensation Committee, to satisfy employee tax obligations on vested stock awards. As of March 31, 2025, $188,500 remained under the current authorization[86][87] Revenue by Geographical Region (Nine Months Ended March 31) | Region | 2025 Revenue | 2025 % | 2024 Revenue | 2024 % | | :--- | :--- | :--- | :--- | :--- | | United States | $21,271,525 | 58.1% | $19,220,592 | 59.1% | | Europe | $11,619,759 | 31.7% | $10,225,116 | 31.5% | | Rest of World | $3,728,780 | 10.2% | $3,044,677 | 9.4% | | Total | $36,620,064 | 100% | $32,490,385 | 100% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 12.7% revenue increase to $36.6 million for the nine months ended March 31, 2025, a $1.1 million net loss, and a significant rise in Adjusted EBITDA Results of Operations For the nine months ended March 31, 2025, total revenue grew 12.7% to $36.6 million, gross profit increased to $17.9 million, and the net loss widened to $1.1 million Revenue Comparison (Nine Months Ended March 31) | Category | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Platforms | $13,770,831 | $9,679,179 | $4,091,652 | 42.3% | | Transactions | $22,849,233 | $22,811,206 | $38,027 | 0.2% | | Total revenue | $36,620,064 | $32,490,385 | $4,129,679 | 12.7% | Gross Profit Comparison (Nine Months Ended March 31) | Category | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Platforms | $11,993,516 | $8,239,028 | $3,754,488 | 45.6% | | Transactions | $5,860,533 | $5,758,272 | $102,261 | 1.8% | | Total gross profit | $17,854,049 | $13,997,300 | $3,856,749 | 27.6% | - Sales and marketing expenses for the nine-month period increased by $1.5 million (58.5%), primarily due to greater personnel costs, consulting expenses, and advertising spend associated with the Scite acquisition[142] - The net loss for the nine months ended March 31, 2025 increased by 13.4% to $1.1 million, mainly due to charges from increasing the estimated earnout liability for the Scite acquisition, which offset the growth in gross profit[145] Liquidity and Capital Resources As of March 31, 2025, cash and cash equivalents increased to $9.9 million, driven by $4.8 million in operating cash flow, with a $500,000 revolving credit line available - Cash and cash equivalents increased by $3.75 million during the nine months ended March 31, 2025, ending the period at $9,852,007[147] - Net cash from operating activities was $4.8 million, primarily resulting from a non-cash adjustment to contingent earnout liability ($2.8M), an increase in deferred revenue ($1.3M), and stock-based compensation ($1.4M)[148] - The company has a $500,000 secured revolving line of credit with PNC Bank, maturing April 15, 2026. There were no outstanding borrowings as of March 31, 2025[152] Non-GAAP Measure – Adjusted EBITDA Adjusted EBITDA, a non-GAAP measure, significantly increased to $3.7 million for the nine months ended March 31, 2025, reflecting improved operational performance Reconciliation of Net Income (Loss) to Adjusted EBITDA | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $216,470 | $76,301 | ($1,094,760) | ($965,370) | | Adjustments | $1,202,585 | $884,439 | $4,749,306 | $1,803,681 | | Adjusted EBITDA | $1,419,055 | $960,740 | $3,654,546 | $838,311 | Quantitative and Qualitative Disclosures About Market Risk This section is not required for smaller reporting companies - Disclosure is not required for this item[157] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[161] - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[164] PART II — OTHER INFORMATION Risk Factors No material changes occurred to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended June 30, 2024[165] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 246,707 shares for approximately $703,115 during the quarter ended March 31, 2025, under its stock repurchase program, with $188,500 remaining available Common Stock Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :--- | :--- | :--- | :--- | | January 2025 | — | — | $891,615 | | February 2025 | — | — | $891,615 | | March 2025 | 246,707 | $2.85 | $188,500 | - For the nine months ended March 31, 2025, the company repurchased a total of 300,596 shares for an aggregate amount of $908,393[168] Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including acquisition agreements, corporate bylaws, and officer certifications