What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2020-09-24 compared with 2019-09-19 · 282 added, 267 removed, 560 unchanged (50% of the section changed)

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and Subsidiaries

Encino, California

Henderson, Nevada

Opinion on the Financial Statements

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balance sheets of Research Solutions, Inc.

(the “Company”) and Subsidiaries as of June 30, 2019 and 2018, the related

statements of operations and other comprehensive loss, stockholders’

equity, and cash flows for the years then ended, and

the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of June 30, 2019 and 2018, and the results of

its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the

United States of America.

(the “Company”) and Subsidiaries as of June 30, 2020 and 2019,

the related statements of operations and other comprehensive loss, stockholders’

equity, and cash flows for the years then

ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial

statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and

the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted

in the United States of America.

Basis for Opinion

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Los Angeles, California

September 24, 2020

Research Solutions, Inc.

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Loss from operations

Other income (expenses):

Interest expense

Total other income

Loss from operations before provision for income taxes

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Comprehensive loss

$ (1,702,719 )

Loss per common share:

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Consolidated Statement of Stockholders'

For the Years Ended June 30, 2019 and

For the Years Ended June 30, 2020

Comprehensive

Stockholders'

Shares Amount

Balance, July 1, 2018

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Fair value of vested restricted common stock

Forfeited restricted common stock

Repurchase and retirement of common stock

Modification cost of stock options

Common stock issued upon exercise of stock options

Common stock issued upon exercise of warrants

Foreign currency translation

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Fair value of vested restricted common stock

Repurchase and retirement of common stock

Repurchase of common stock

Common stock issued upon exercise of stock options

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Cash flow from operating activities:

$ (1,678,741 )

Adjustment to reconcile net loss to net cash used in operating activities of continuing operations:

Gain from sale of discontinued operations

Loss from continuing operations

Adjustment to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

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Fair value of vested restricted common stock

Modification cost of stock options

Changes in operating assets and liabilities:

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Lease liability

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flow from investing activities:

Purchase of property and equipment

Purchase of intangible assets

Net cash used in investing activities

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Proceeds from the exercise of stock options

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents, beginning of period

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Supplemental disclosures of cash flow information:

Cash paid for income taxes

Cash paid for interest

notes to consolidated financial statements

paid for income taxes

See notes to consolidated financial statements

RESEARCH SOLUTIONS, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended June 30, 2019 and

For the Years Ended June 30, 2020

Organization, Nature of Business and Basis of Presentation

Research Solutions,

Solutions, Inc.

(the “Company,”

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“us”

or “our”) was

incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with two wholly owned subsidiaries

at June 30, 2019:

or “our”)

was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with two wholly

owned subsidiaries at June 30, 2020:

Reprints Desk, Inc., a Delaware corporation and Reprints Desk Latin America S.

de C.V, an entity organized

under the laws of Mexico.

On June 30, 2017, we sold the intangible assets of our Reprints and ePrints business line, but specifically

excluding billed accounts receivable and respective liabilities, pursuant to an Asset Purchase Agreement dated June 20, 2017.

aggregate net consideration for the sale is comprised of $450,000 paid on the closing date, and earn-out payments of 45% of gross

margin over the 30 month period subsequent to the closing date.

We have made a policy election to record the contingent consideration

when the consideration is determined to be realizable.

de C.V, an entity organized under the laws of Mexico.

Nature of Business

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and data used throughout the intellectual property development lifecycle.

Our cloud-based SaaS research intelligence platform consists of proprietary software and Internet-based

interfaces sold to customers for an annual subscription fee.

Legacy functionality allows customers to initiate orders, route orders

for the lowest cost acquisition, manage transactions, obtain spend and usage reporting, automate authentication, and connect seamlessly

to in-house and third-party software systems.

Customers can also enhance the information resources they already own or license

and collaborate around bibliographic information.

Our cloud-based

SaaS research intelligence platform consists of proprietary software and Internet-based interfaces sold to customers for an annual

subscription fee.

Legacy functionality allows customers to initiate orders, route orders for the lowest cost acquisition, manage

transactions, obtain spend and usage reporting, automate authentication, and connect seamlessly to in-house and third-party software

Customers can also enhance the information resources they already own or license and collaborate around bibliographic

functionality has recently been added to our Platform in the form of interactive app-like gadgets.

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leverage our Platform’s efficiencies in scalability, stability and development costs to fuel rapid innovation and competitive

Our Platform provides our customers with a single source to the universe of published STM content that

includes over 70 million existing STM articles and over one million newly published STM articles each year.

STM content is sold

to our customers on a 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.

provides our customers with a single source to the universe of published STM content that includes over 70 million existing STM

articles and over one million newly published STM articles each year.

STM content is sold to our customers on a 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.

allows customers to find and download digital versions of STM articles that are critical to their research.

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Cash denominated in Euros

with a US Dollar equivalent of $63,933 and $109,585 at June 30, 2019 and 2018, respectively, was held in accounts at

financial institutions located in Europe.

with a US Dollar equivalent of $134,175 and $63,933 at June 30, 2020 and 2019, respectively, was held in accounts

at financial institutions located in Europe.

The Company has no

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summarizes our content costs from our vendors:

Year Ended June 30,

Property and equipment

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Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued 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.

The Company adopted the guidance

of ASC 606 on July 1, 2018.

The implementation of ASC 606 had no impact on the consolidated financial statements and no cumulative

effect adjustment was recognized.

In May 2014, the

Financial Accounting Standards Board (“FASB”) issued 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.

The Company adopted the guidance of ASC 606 on July 1, 2018.

The implementation

of ASC 606 had no impact on the consolidated financial statements and no cumulative effect adjustment was recognized.

Revenues are recognized

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revenue recognition criteria have been met.

Revenue by Geographical Region

The following table summarizes revenue by

geographical region:

United States

Rest of World

Accounts Receivable by Geographical

The following table summarizes

accounts receivable by geographical region:

United States

Rest of World

Deferred Revenue

Customer deposits and

billings or payments received in advance of revenue recognition are recorded as deferred revenue.

deposits and billings or payments received in advance of revenue recognition are recorded as deferred revenue.

Cost of Revenue

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Stock-Based Compensation

The Company periodically

issues stock options, warrants and restricted stock to employees and non-employees for services, in capital raising transactions,

and for financing costs.

The Company accounts 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.

The Company estimates the fair value of stock option and warrant awards to employees and directors on

the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest

is recognized as expense over the required service period in the Company's Statements of Operations.

The Company estimates the

fair value of restricted stock awards to employees and directors using the market price of the Company’s common stock on

the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over

the required service period in the Company's Statements of Operations.

The Company accounts for share-based payments to non-employees

in accordance with Topic 505 of the FASB Accounting Standards Codification, whereby the value of the stock compensation is based

upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which

the necessary performance to earn the equity instruments is complete.

Stock-based compensation is based on awards ultimately expected

to vest and is reduced for estimated forfeitures.

Forfeitures are estimated at the time of grant and revised, as necessary, in

subsequent periods if actual forfeitures differ from those estimates.

Company periodically issues stock options, warrants and restricted stock to employees and non-employees for services, in capital

raising transactions, and for financing costs.

The Company accounts 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.

The Company estimates the fair value of stock option and warrant awards to employees

and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately

expected to vest is recognized as expense over the required service period in the Company's Statements of Operations.

estimates the fair value of restricted stock awards to employees and directors using the market price of the Company’s common

stock on the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized as expense

over the required service period in the Company's Statements of Operations.

In prior periods through June 30, 2019,

the Company accounted for share-based payments to non-employees in accordance with Topic 505 of the FASB Accounting Standards Codification,

whereby the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance

commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete.

compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures.

Forfeitures are estimated

at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

On July 1, 2019,

the Company adopted Accounting Standards Update (ASU) 2018-07 which expands the scope of Topic 718 to include share-based payment

transactions for acquiring goods and services from nonemployees.

As a result, nonemployee share-based transactions will be measured

by estimating the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying

performance conditions.

The adoption of the standard did not have a material impact on our financial statements.

Foreign Currency

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which a foreign currency transaction is denominated, are included in selling, general and administrative expenses and amounted

to a loss of $24,500 and a gain of $8,020, for the years ended June 30, 2019 and 2018, respectively.

Cash denominated in Euros

with a US Dollar equivalent of $63,933 and $109,585 at June 30, 2019 and 2018, respectively, was held in accounts at

to loss of $19,529 and $24,500, for the years ended June 30, 2020 and 2019, respectively.

Cash denominated in Euros with

a US Dollar equivalent of $134,175 and $63,933 at June 30, 2020 and 2019, respectively, was held in accounts at

financial institutions located in Europe.

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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 earnings per share

is computed by dividing the net income applicable to common stock holders 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.

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 earnings per share is computed by dividing the net income applicable

to common stock holders 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.

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.

At June 30, 2019 potentially dilutive securities include options to acquire 3,287,335 shares of common stock, warrants to acquire

1,885,000 shares of common stock and unvested restricted common stock of 311,535.

At June 30, 2018 potentially dilutive

securities include options to acquire 2,991,835 shares of common stock, warrants to acquire 1,985,000 shares of common stock and

unvested restricted common stock of 416,619.

The dilutive effect of potentially dilutive securities is reflected in diluted net

income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

At June 30, 2020 potentially

dilutive securities include options to acquire 3,327,580 shares of common stock, warrants to acquire 385,000 shares of common stock

and unvested restricted common stock of 191,855.

At June 30, 2019 potentially dilutive securities include options

to acquire 3,287,335 shares of common stock, warrants to acquire 1,885,000 shares of common stock and unvested restricted common

stock of 311,535.

The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise

prices were lower than the average fair market value of common shares during the reporting period.

Basic and diluted net

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Recently Issued Accounting Pronouncements

In June 2018, the FASB

issued ASU 2018-07, “Compensation –

Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment

Accounting.”

The ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services

from nonemployees.

The ASU also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1)

financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract

accounted for under Revenue from Contracts with Customers (Topic 606).

The guidance is effective for fiscal years beginning after

December 15, 2018, including interim periods within that fiscal year.

Early adoption is permitted.

The Company is currently assessing

the effect that the ASU will have on our financial position, results of operations, and disclosures.

In August 2018, the

FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

In August 2018,

the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework –

Changes to the Disclosure Requirements

for Fair Value Measurement.”

ASU 2018-13 amends certain disclosure requirements pertaining to fair value measurement, and

is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The adoption of

ASU 2018-13 is not expected to have a material impact on the Company’s financial position, results of operations, and cash

Changes to the Disclosure

Requirements for Fair Value Measurement.”

ASU 2018-13 amends certain disclosure requirements pertaining to fair value measurement,

and is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

of ASU 2018-13 is not expected to have a material impact on the Company’s financial position, results of operations, and

In June 2016, the FASB

issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

ASU 2016-13 requires entities to use a forward-looking

approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments,

including trade receivables.

This may result in the earlier recognition of allowances for losses.

ASU 2016-13 is effective for

the Company beginning January 1, 2023, and early adoption is permitted.

The Company does not believe the potential impact

of the new guidance and related codification improvements will be material to its financial position, results of operations and

Other recent accounting

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The Company entered

into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which, as amended, provides for

a revolving line of credit for the lesser of $2,500,000, or 80% of eligible accounts receivable.

The line of credit matures on

December 31, 2019, and is subject to certain financial and performance covenants with which we were in compliance as of June 30,

Financial covenants include maintaining an adjusted quick ratio of unrestricted cash and net accounts receivable, divided

by current liabilities plus debt less deferred revenue of at least 1.15 to 1.0, and maintaining tangible net worth of $1,500,000,

plus 50% of net income for the fiscal quarter ended from and after December 31, 2017, plus 50% of the dollar value of equity issuances

after October 1, 2017 and the principal amount of subordinated debt.

The line of credit bears interest at the prime rate plus 2.25%

for periods in which we maintain an adjusted quick ratio of 1.3 to 1.0 (the “Streamline Period”), and at the prime

rate plus 5.25% when a Streamline Period is not in effect.

into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which, as amended, provides

for a revolving line of credit for the lesser of $2,500,000, or 80% of eligible accounts receivable.

The line of credit matures

on February 14, 2022, and is subject to certain financial and performance covenants with which we were in compliance as of

June 30, 2020.

Financial covenants include maintaining an adjusted quick ratio of unrestricted cash and net accounts receivable,

divided by current liabilities plus debt less deferred revenue of at least 1.15 to 1.0, and maintaining tangible net worth of $1,500,000,

plus 50% of net income for the fiscal quarter ended from and after December 31, 2017, plus 50% of the dollar value of equity

issuances after October 1, 2017 and the principal amount of subordinated debt.

The line of credit bears interest at an annual

rate equal to the greater of 1% above the prime rate and 5.5%.

The interest rate on the line of credit was 5.5% as of June 30,

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borrowings under the line as of June 30, 2020 and June 30, 2019, respectively.

As of June 30, 2019, there was approximately

$2,215,000 of available credit.

As of June 30, 2020, there

was approximately $2,089,000 of available credit.

Lease Obligations

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the present value of the lease payments.

The Company classified the lease as an operating lease and determined that the fair value

of the lease assets and liability at the inception of the lease was $463,000 using a discount rate of 3.75%.

During the twelve

months ended June 30, 2019, the Company made payments of $119,786 towards the lease liability.

The Company classified the lease as an operating lease and determined that the value of

the lease assets and liability at the inception of the lease was $463,000 using a discount rate of 3.75%.

During the twelve months

ended June 30, 2020, the Company made payments of $129,187 towards the lease liability.

As of June 30, 2020 and

2019, lease liability amounted to $79,326 and $208,513, respectively.

ASU 2016-02 requires recognition in the statement of operations

of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line

ASU 2016-02 requires recognition in the statement of

operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line

Rent expense, including real estate taxes, for the years ended June 30, 2020 and 2019 was $111,746 and $144,963, respectively.

The right of use asset at June 30, 2019 was $192,245.

During the years ended June 30, 2019 and 2018, the Company reflected amortization

of right of use asset of $115,079 and $110,593 related to this lease, respectively, resulting in a net asset balance of $192,245

as of June 30, 2019.

During the years ended June 30, 2020 and 2019, the Company reflected

amortization of right of use asset of $119,914 and $115,079 related to this lease, respectively, resulting in a net asset balance

of $72,331 as of June 30, 2020.

Future minimum lease

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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 5,000,000 to 7,000,000.

On November 21, 2017, the Company’s

stockholders approved the adoption of the 2017 Plan (previously adopted by our board of directors on September 14, 2017), which

authorized a maximum of 1,874,513 shares of common stock that may be issued pursuant to awards granted under the 2017 Plan.

adoption of the 2017 Plan we ceased granting incentive awards under the 2007 Plan and commenced granting incentive awards under

the 2017 Plan.

The shares of our common stock underlying cancelled and forfeited awards issued under the 2017 Plan may again become

available for grant under the 2017 Plan.

Cancelled and forfeited awards issued under the 2007 Plan that were cancelled or forfeited

prior to November 21, 2017 became available for grant under the 2007 Plan.

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 5,000,000 to 7,000,000.

On November 21, 2017,

the Company’s stockholders approved the adoption of the 2017 Plan (previously adopted by our board of directors on September 14,

2017), which authorized a maximum of 1,874,513 shares of common stock that may be issued pursuant to awards granted under the 2017

On November 12, 2019, the Company’s stockholders approved an increase in the maximum number of shares of common

stock that may be issued pursuant to awards granted under the 2017 Omnibus Incentive Plan from 1,874,513 to 2,374,513.

Upon adoption

of the 2017 Plan we ceased granting incentive awards under the 2007 Plan and commenced granting incentive awards under the 2017

The shares of our common stock underlying cancelled and forfeited awards issued under the 2017 Plan may again become available

for grant under the 2017 Plan.

Cancelled and forfeited awards issued under the 2007 Plan that were cancelled or forfeited prior

to November 21, 2017 became available for grant under the 2007 Plan.

As of June 30, 2020, there were 622,429 shares available

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All incentive stock award grants prior

to the adoption of the 2017 Plan on November 21, 2017 were made under the 2007 Plan, and all incentive stock award grants after

the adoption of the 2017 Plan on November 21, 2017 were made under the 2017 Plan.

to the adoption of the 2017 Plan on November 21, 2017 were made under the 2007 Plan, and all incentive stock award grants

after the adoption of the 2017 Plan on November 21, 2017 were made under the 2017 Plan.

The majority of awards

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0.43% - 1.69 %

1.45% - 2.88 %

Expected life (in years)

Expected volatility

The weighted average

remaining contractual life of all options outstanding as of June 30, 2019 was 6.13 years.

The remaining contractual life for options

vested and exercisable at June 30, 2018 was 6.39 years.

Furthermore, the aggregate intrinsic value of options outstanding as of

June 30, 2019 was $4,588,211, and the aggregate intrinsic value of options vested and exercisable at June 30, 2019 was $4,268,743,

in each case based on the fair value of the Company’s common stock on June 30, 2019.

The weighted average remaining contractual life of all options

outstanding as of June 30, 2020 was 5.75 years.

The remaining contractual life for options vested and exercisable at June 30, 2020

was 5.53 years.

Furthermore, the aggregate intrinsic value of options outstanding as of June 30, 2020 was $2,928,695, and the aggregate

intrinsic value of options vested and exercisable at June 30, 2020 was $2,883,851, in each case based on the fair value of the

Company’s common stock on June 30, 2020.

During the year ended

June 30, 2019, the Company granted 717,000 options to employees and directors with a fair value of $881,860.

The total fair

value of options that vested during the year ended June 30, 2019 was $523,978 and was included in selling, general and administrative

expenses in the accompanying statement of operations.

As of June 30, 2019, the amount of unvested compensation related to the unvested

options was $425,901 which will be recorded as an expense in future periods as the options vest.

During the year ended June 30,

2019, the Company issued 92,954 shares of common stock upon the exercise of 221,500 options on a cashless basis and the Company

issued 145,000 shares of common stock on the exercise of 175,000 for cash and common stock, resulting in proceeds to the Company

During the year ended June 30, 2018, the Company granted 807,000 options to employees and directors with

a fair value of $455,040.

The total fair value of options that vested during the year ended June 30, 2018 was $451,475 and

was included in selling, general and administrative expenses in the accompanying statement of operations.

June 30, 2020, the Company granted 324,000 options to employees and directors with a fair value of $488,080 which amount will be

amortized over the vesting period.

The total fair value of options that vested during the year ended June 30, 2020 was $610,634

and was included in selling, general and administrative expenses in the accompanying statement of operations.

As of June 30, 2020,

the amount of unvested compensation related to these options was $73,353 which will be recorded as an expense in future periods

as the options vest.

During the year ended June 30, 2018, the Company issued 45,971 shares of common stock upon the exercise of

462,766 options on a cashless basis.

On September 30, 2017,

options originally issued to a former director to purchase an aggregate of 17,600 shares of the Company’s common stock were

modified to extend the exercise period from three months to approximately five years.

Stock-based compensation cost of $6,233

was recorded during the year ended June 30, 2018 as a result of the modification.

the amount of unvested compensation related to the unvested options was $290,515 which will be recorded as an expense in future

periods as the options vest.

During the year ended June 30, 2020, the Company issued 161,698 net shares of common stock upon the

exercise of 263,755 options on a cashless basis.

During the year ended June 30, 2019, the Company granted 717,000

options to employees and directors with a fair value of $881,860 which amount will be amortized over the vesting period.

total fair value of options that vested during the year ended June 30, 2019 was $523,978 and was included in selling, general and

administrative expenses in the accompanying statement of operations.

During the year ended June 30, 2019, the Company issued 92,954

shares of common stock upon the exercise of 221,500 options on a cashless basis and the Company issued 145,000 shares of common

stock on the exercise of 175,000 options for cash and common stock, resulting in proceeds to the Company of $100,000.

Additional information regarding stock options

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Exercisable, June 30, 2020

During the year ended June 30, 2018, the Company issued 39,000 shares of common stock upon the exercise

of 100,000 warrants on a cashless basis.

The intrinsic value for all warrants outstanding as of June 30, 2019 was $2,887,050, based

on the fair value of the Company’s common stock on June 30, 2019.

During the year ended

June 30, 2020, certain holders of warrants to purchase shares of the Company’s common stock at a per share exercise

price of $1.25 exercised those warrants to purchase 1,500,000 shares, generating gross proceeds to the Company of $1,875,000.

intrinsic value for all warrants outstanding as of June 30, 2020 was $434,200, based on the fair value of the Company’s

common stock on June 30, 2020.

Additional information regarding warrants outstanding

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Prior to July 1,

the Company issued 1,573,197 shares of restricted common stock to employees valued at $1,563,074, of which $1,150,136 had been

recognized as an expense.

As of June 30, 2017, 513,194 of these shares with a grant date fair value of $412,938 had not yet vested.

2018, the Company issued 1,996,304 shares of restricted common stock to employees valued at $1,563,074, of which $1,482,663 had

been recognized as an expense.

As of June 30, 2018, 416,619 of these shares with a grant date fair value of $360,160 had not

During the year ended

June 30, 2019, the Company issued an additional 170,245 shares of restricted stock to employees.

These shares vest over a three

year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met.

The aggregate

fair value of the stock awards was $467,952 based on the market price of our common stock ranging from $1.02 to $1.59 per share

on the date of grant, which will be amortized over the three-year vesting period.

These shares vest over a

three year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met.

aggregate fair value of the stock awards was $355,417 based on the market price of our common stock ranging from $1.99 to $2.50

per share on the date of grant, which will be amortized over the three-year vesting period.

During the year ended

June 30, 2020, the Company issued an additional 110,817 shares of restricted stock to employees.

These shares vest over a three

year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met.

The aggregate

fair value of the stock awards was $355,417 based on the market price of our common stock ranging from $1.99 to $2.50 per share

on the date of grant, which will be amortized over the three-year vesting period.

The total fair value of restricted common stock vested during the year ended June 30, 2019 and 2018 was

$303,194 and $332,527, respectively, and is included in selling, general and administrative expenses in the accompanying statements

of operations.

As of June 30, 2019, the amount of unvested compensation related to issuances of restricted common stock was

$412,383, which will be recognized as an expense in future periods as the shares vest.

When calculating basic net income (loss)

per share, these shares are included in weighted average common shares outstanding from the time they vest.

When calculating diluted

net income per share, these shares are included in weighted average common shares outstanding as of their grant date.

These shares vest over a

three year period, with a one year cliff vesting period, and remain subject to forfeiture if vesting conditions are not met.

aggregate fair value of the stock awards was $322,875 based on the market price of our common stock ranging from $2.75 to $3.50

per share on the date of grant, which will be amortized over the three-year vesting period.

The total fair value

of restricted common stock vested during the year ended June 30, 2020 and 2019 was $340,961 and $303,194, respectively, and

is included in selling, general and administrative expenses in the accompanying statements of operations.

As of June 30,

2020, the amount of unvested compensation related to issuances of restricted common stock was $394,297, which will be recognized

as an expense in future periods as the shares vest.

When calculating basic net income (loss) per share, these shares are included

in weighted average common shares outstanding from the time they vest.

When calculating diluted net income per share, these shares

are included in weighted average common shares outstanding as of their grant date.

The following table summarizes restricted

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Common Stock Repurchase and Retirement

Effective as of February

8, 2018, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2018 on the last

day of each trading window and otherwise in accordance with our insider trading policies, of up to $300,000 of outstanding common

stock (at prices no greater than $3.00 per share) from our employees to satisfy their tax obligations in connection with the vesting

Effective as of November 13,

2018, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2019 on the last day

of each trading window and otherwise in accordance with our insider trading policies, of up to $300,000 of outstanding common stock

(at prices no greater than $3.00 per share) from our employees to satisfy their tax obligations in connection with the vesting

of stock incentive awards.

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and will depend on their evaluation of market conditions and other factors.

Effective as of November

13, 2018, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2019 on the last

day of each trading window and otherwise in accordance with our insider trading policies, of up to $300,000 of outstanding common

stock (at prices no greater than $3.00 per share) from our employees to satisfy their tax obligations in connection with the vesting

Effective as of February 11,

2020, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2020 on the last day

of each trading window and otherwise in accordance with our insider trading policies, of up to $400,000 of outstanding common stock

(at prices no greater than $4.00 per share) from our employees to satisfy their tax obligations in connection with the vesting

of stock incentive awards.

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During the years ended

June 30, 2019 and 2018, we repurchased 88,250 and 120,900 shares of our common stock under the repurchase plan at an average price

of approximately $2.27 and $1.26 per share, respectively, for an aggregate amount of $200,023 and $152,739, respectively.

June 30, 2019, $213,255 remains under the current authorization to repurchase our outstanding common stock from our employees.

June 30, 2020 and 2019, we repurchased approximately 116,200 and 88,250 shares of our common stock under the repurchase plan

at an average price of approximately $2.77 and $2.27 per share, respectively, for an aggregate amount of $321,601 and $200,023,

respectively.

As of June 30, 2020, $277,774 remains under the current authorization to repurchase our outstanding common stock

from our employees.

Shares repurchased

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Contingencies and Commitments

The Company is subject

to risks and uncertainties as a result of the COVID-19 pandemic.

The extent of the impact of the COVID-19 pandemic on the Company’s

business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are

taking continue to evolve.

Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19

pandemic, and it is possible that it could cause a local and/or global economic recession.

Policymakers around the globe have responded

with fiscal policy actions to support the healthcare industry and economy as a whole.

The magnitude and overall effectiveness of

these actions remain uncertain.

To date, we have not

experienced any significant changes in our business that would have a significant negative impact on our consolidated statements

of operations or cash flows.

The severity of the

impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited

to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, service

providers and suppliers, all of which are uncertain and cannot be predicted.

As of the date of issuance of Company’s financial

statements, the extent to which the COVID-19 pandemic may in the future materially impact the Company’s financial condition,

liquidity or results of operations is uncertain.

Legal Proceedings

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During the year ended

June 30, 2019, the Company recorded a provision for income tax expense of $27,040 which consisted of $2,088 in state income tax

payments and $24,952 in foreign (Mexico) income tax payments.

During the year ended June 30, 2018, the Company recorded a provision

for income tax expense of $39,779 which consisted of $2,629 in state income tax payments and $37,150 in foreign (Mexico) income

tax payments.

June 30, 2020, the Company recorded a provision for income tax expense of $7,836 which consisted of $2,201 in state income

tax payments and $5,635 in foreign (Mexico) income tax payments.

During the year ended June 30, 2019, the Company recorded

a provision for income tax expense of $27,040 which consisted of $2,088 in state income tax payments and $24,952 in foreign (Mexico)

income tax payments.

The reconciliation of the effective income

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The Company has provided

a valuation allowance on the deferred tax assets at June 30, 2019 and 2018 to reduce such asset to zero, since there is no assurance

that the Company will generate future taxable income to utilize such asset.

Management will review this valuation allowance requirement

periodically and make adjustments as warranted.

The net change in the valuation allowance for the year ended June 30,

2019 was an increase of $192,695.

At June 30, 2019 and

2018, the Company had federal net operating loss (“NOL”) carryforwards of approximately $12,735,000 and $11,750,000,

a valuation allowance on the deferred tax assets at June 30, 2020 and 2019 to reduce such asset to zero, since there is no

assurance that the Company will generate future taxable income to utilize such asset.

Management will review this valuation allowance

requirement periodically and make adjustments as warranted.

The net change in the valuation allowance for the year ended

June 30, 2020 was an increase of $101,530.

At June 30, 2020

and 2019, the Company had federal net operating loss (“NOL”) carryforwards of approximately $13,800,000 and $12,735,000,

respectively, and state NOL carryforwards of approximately $6,780,000 and $6,445,000, respectively.

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periods and requires increased disclosures.

At the date of adoption, and as of June 30, 2019 and 2018, the Company did not have

a liability for unrecognized tax benefits, and no adjustment was required at adoption.

At the date of adoption, and as of June 30, 2020 and 2019, the Company did not

have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

The Company’s

policy is to record interest and penalties on uncertain tax provisions as income tax expense.

As of June 30, 2019 and 2018, the

Company has no accrued interest or penalties related to uncertain tax positions.

As of June 30, 2020 and 2019,

the Company has no accrued interest or penalties related to uncertain tax positions.

Company is subject

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Operations (Reprints and ePrints business line)

On June 30, 2017, we sold the intangible assets of our Reprints and ePrints business line, but specifically

excluding billed accounts receivable and respective liabilities, pursuant to an Asset Purchase Agreement dated June 20, 2017.

aggregate net consideration for the sale is comprised of $450,000 paid on the closing date, and earn-out payments of 45% of gross

margin over the 30 month period subsequent to the closing date.

We have made a policy election to record the contingent consideration

when the consideration is determined to be realizable, which amounted to $214,737 and $256,995 for the years ended June 30, 2019

and 2018, respectively.

On June 30, 2017, we

sold the intangible assets of our Reprints and ePrints business line, but specifically excluding billed accounts receivable and

respective liabilities, pursuant to an Asset Purchase Agreement dated June 20, 2017.

The aggregate net consideration for

the sale is comprised of $450,000 paid on the closing date, and earn-out payments of 45% of gross margin over the 30 month period

subsequent to the closing date.

We have made a policy election to record the contingent consideration when the consideration is

determined to be realizable, which amounted to $117,445 and $214,737 for the years ended June 30, 2020 and 2019, respectively.

As of June 30, 2020, no further consideration will be due.

Subsequent Events

Stock Options

On August 2, 2019,

the Company issued 24,307 shares of common stock upon the exercise of 40,000 options on a cashless basis.

In July 2020, the Company issued 54,777 shares of common stock

upon the exercise of stock options underlying 90,000 shares of stock.

On September 17, 2020, the Company granted stock options

underlying 173,000 shares of common stock to employees with a fair value of approximately $235,000.

The options vest over a three-year

period, and have a term of ten years.

Restricted Common

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data