What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-09-19 compared with 2024-09-20 · 79 added, 101 removed, 170 unchanged (51% of the section changed)

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

We provide software and related services to help research intensive organizations 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 software-as-a-service (“SaaS”) via auto-renewing license agreements.

Corporate, academic, and government customers typically sign up under annual agreements.

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.

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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.

Our Platforms enable life science and other research-intensive organizations to accelerate their research and development activities through our advanced discovery tools (i.e.

search), tools to access and buy STM articles required to support their research (i.e.

acquire), as well as tools that manage that content across the enterprise and on an individual basis (i.e.

The Platforms typically deliver an ROI 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 over time.

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.

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.

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.

Discover – These solutions facilitate search (discovery) across virtually all STM articles available.

The solutions we offer include free (basic) search solutions and advanced search tools like the Resolute.ai and scite.ai products.

These tools allow for searching and identifying relevant research and then purchasing that research through one of our other solutions.

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

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.

Our Platform is deployed as a single, multi-tenant system across our entire customer base.

Customers securely access the Platform 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 Platform can also be configured to

satisfy a customer’s individual preferences.

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

Acquire – Our Article Galaxy® (“AG”) solution allows for research organizations to load their entitlements (subscriptions, discount or token packages, and their existing library of articles) and AG 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 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.

Manage – Our References solution allows users to access the article inside the Platform including setting up personal folders or team folders and allows researchers to markup and take notes on the articles in a supported browser on a desktop or tablet.

We use Artificial Intelligence (“AI”) in several parts of the research workflow today and will continually add capability as we move forward.

Today we offer an AI based recommendation engine in our Discover, Acquire, and Manage Platform solutions.

We also offer an AI based “assistant” in some of our solutions to allow the researcher to ask questions about articles, groups of articles (folders), and more.

We also have the capability to provide full text search on STM content in the scite.ai Platform where the publisher gives us the rights to do so.

Using Resolute.ai and scite.ai technology, we plan to release several new Platform solutions to enhance the research workflows described above and add new solutions to support the analysis functions that exist in our typical customer base.

Our Platforms are deployed as a single, multi-tenant system across our entire customer base.

The Platform can also be configured to satisfy a customer’s individual preferences.

We leverage our Platform efficiencies in scalability, stability and development costs to fuel rapid innovation and to gain a competitive advantage.

We provide our researchers with a single source to the universe of published STM content that includes over 100 million existing STM articles and over 2 to 4 million newly published STM articles each year.

STM content is sold to our customers on a per transaction basis.

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 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 plan to release several new Platform solutions to enhance the research workflows described above and add new solutions to support the analysis functions that exist in our typical customer base.

Our Platforms are generally deployed as a single, multi-tenant system across our entire customer base.

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.

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

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.

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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 under one minute.

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.

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 minutes.

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.

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We derive our revenues from two sources:

annual licenses that allow customers to access and utilize certain premium features of our cloud-based SaaS research intelligence platform (“Platform” and “Platforms”) and the transactional sale of STM content managed, sourced and delivered through the Platform (“Transactions”).

annual licenses that allow customers to access and utilize certain premium features of our

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:

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● recognize revenue as the performance obligation is satisfied.

We charge a subscription fee that allows customers to access and utilize certain premium features of our Platform.

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.

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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, 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 our Statements of Operations.

We estimate the fair value of restricted stock awards to employees and directors using the market price of our 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 our Statements of Operations.

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 consolidated statements of operations and comprehensive income (loss) 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.

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Allowance for Credit Losses

Our trade accounts receivable are recorded at amounts billed to customers and presented on the balance sheet net of the allowance for estimated 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 and an overall assessment of past due trade accounts receivable outstanding.

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 $182,324 and $68,579 as of June 30, 2025 and 2024, respectively.

We added provisions and reserve adjustments of approximately $163,000 and $99,000 in the years ended June 30, 2025 and 2024, respectively.

We had write-offs of approximately $49,000 and $80,000 in the years ended June 30, 2025 and 2024, respectively.

Foreign Currency

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We currently do not engage in any currency hedging activities.

The following table summarizes the exchange rates used:

Period end Euro :

US Dollar exchange rate

Average period Euro :

US Dollar exchange rate

Period end GBP :

US Dollar exchange rate

Average period GBP :

US Dollar exchange rate

Period end Mexican Peso :

US Dollar exchange rate

Average period Mexican Peso :

US Dollar exchange rate

Quarterly Information (Unaudited)

The following table sets forth unaudited and quarterly financial data for the four quarters of fiscal years 2024 and 2023:

Total revenue

Cost of revenue:

Total cost of revenue

Gross profit:

Total gross profit

Operating expenses:

Sales and marketing

Technology and product dev.

General and administrative

Depreciation and amortization

Stock-based comp.

Foreign currency transaction loss (gain)

Total operating expenses

Other income (expenses and income taxes)

Net income (loss)

Basic income (loss) per common share:

Net income (loss) per share

Basic weighted average common shares outstanding

Diluted income (loss) per common share:

Net income (loss) per share

Diluted weighted average common shares outstanding

Comparison of the Years Ended June 30, 2025 and 2024

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Change in fair value of contingent earnout liability

Income (loss) from operations before provision for income taxes

Income (loss) before provision for income taxes

Provision for income taxes

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Total revenue increased $4,434,082, or 9.9%, for the year ended June 30, 2025 compared to the prior year, due to the following:

Increased due to additional deployments to new and existing customers, expansion from existing customers and additional revenue from the ResoluteAI and Scite acquisitions.

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.

Increased due to additional deployments to new and existing customers, expansion from existing customers and additional revenue from a full year of the Scite acquisition.

Revenue is recognized ratably over the term of the subscription agreement, which is typically one year for commercial customers and monthly or annual 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.

Increased primarily due to organic higher paid order volume and additional paid order volume due to the FIZ asset acquisition.

Decreased primarily due to lower volume of paid orders.

Cost of Revenue

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Impact as percentage

Increased primarily due to proportionally greater hosting costs from ResoluteAI.

Decreased primarily due to higher copyright margins.

Decreased primarily due to proportionally lower personnel and hosting costs.

No material change.

Years Ended June 30,

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Sales and marketing

Increased primarily due to greater personnel costs, including costs from the ResoluteAI and Scite transactions, and marketing discretionary spend partially offset by lower consulting expenses.

Increased primarily due to greater personnel costs, including a new CRO, consulting and training expenses and marketing discretionary advertising spend, most of which is related to the additional cost base associated with the Scite acquisition.

Technology and product development

Increased due to greater software development personnel costs, primarily from the onboarding personnel from ResoluteAI and Scite, but also due to organic growth in personnel cost.

Increased primarily due to greater software development personnel costs and increased technology subscription costs, most of which are related to the additional cost base associated with the Scite acquisition.

General and administrative

Increased due to greater personnel costs, primarily from the onboarding of Resolute AI and Scite and greater legal expenses, partially offset by lower recruiting expenses.

Greater legal expenses include proxy-related and acquisition-related costs.

Greater personnel costs include separation costs paid to a former officer as result of the resolution of the proxy matter.

Decreased primarily due to lower legal expenses.

Personnel and consulting costs also decreased, partially offset by greater recruiting expenses.

Provision for Income Taxes

During the years ended June 30, 2024 and 2023 we recorded a provision for income taxes of $113,071 and $5,602, respectively, an increase of $107,469, which was largely due to an increase in income tax related to our ResSol LA subsidiary.

During the years ended June 30, 2025 and 2024 we recorded a provision for income taxes of $82,811 and $113,071, respectively, a decrease of $30,260, which was largely due to a decrease in income tax related to our ResSol LA subsidiary.

Net Income (Loss)

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Net income (loss):

Net income decreased $4,358,220 or 762.4%, for the year ended June 30, 2024 compared to the prior year, due to increased operating expenses, primarily in intangibles amortization and depreciation expenses associated with our acquisition accounting, and charges on our other income line related to increasing the estimated earn out liability associated with the acquisitions completed in fiscal year 2024.

Net income increased $5,052,150 or 133.4%, for the year ended June 30, 2025 compared to the prior year, primarily due to increased gross profit, partially offset by increase in sales and marketing expenses and a decrease in the net estimated earn out liability associated with the Scite acquisition completed in fiscal year 2024, due to change of estimated fair value.

Liquidity and Capital Resources

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Cash and cash equivalents, end of period

As of June 30, 2024, we had cash and cash equivalents of $6,100,031 compared to $13,543,333 as of June 30, 2023, a decrease of $7,445,302.

This decrease was primarily due to cash used in investing activities, primarily related to the acquisitions completed in fiscal year 2024.

As of June 30, 2025, we had cash and cash equivalents of $12,227,312 compared to $6,100,031 as of June 30, 2024, an increase of $6,127,281.

This increase was primarily due to cash provided by operating activities.

Operating Activities

Net cash provided by operating activities was $3,550,954 for the year ended June 30, 2024 and resulted primarily from an increase in fair value of vested restricted common stock of $1,994,362, an increase in deferred revenue of $921,879 and an increase in accounts payable and accrued expenses of $560,027, partially offset by an increase in accounts receivable of $344,020.

Net cash provided by operating activities was $3,383,847 for the year ended June 30, 2023 and resulted primarily from an increase in net income, the fair value of vested restricted common stock of $1,418,718, an increase in accounts payable and accrued expenses of $1,337,056 and an increase in deferred revenue of $886,198, partially offset by an increase in accounts receivable of $901,518.

Net cash provided by operating activities was $7,023,166 for the year ended June 30, 2025 and resulted primarily from an adjustment to contingent earnout liability of $1,748,526, an increase in deferred revenue of $1,678,272, restricted common stock expense of $1,518,104 and a decrease in prepaid royalties of $1,066,312, partially offset by a decrease in accounts payable and accrued expenses of $1,426,282 and an increase in accounts receivable of $341,434.

Net cash provided by operating activities was $3,550,954 for the year ended June 30, 2024 and resulted primarily from restricted common stock expense of $1,994,362, an increase in deferred revenue of $921,879 and an increase in accounts payable and accrued expenses of $560,027, partially offset by an increase in accounts receivable of $344,020.

Investing Activities

Net cash used in investing activities was $19,261 for the year ended June 30, 2025 and resulted from the purchase of property and equipment.

Net cash used in investing activities was $10,095,256 for the year ended June 30, 2024 and resulted primarily from the payment for the Scite acquisition of $7,305,493 and the payment for the ResoluteAI acquisition of $2,718,253.

Net cash used in investing activities was $344,659 for the year ended June 30, 2023 and primarily from the payment for non-refundable deposit for asset acquisition of $297,450.

Financing Activities

Net cash used in financing activities was $877,884 for the year ended June 30, 2025 and resulted from the repurchase of common stock of $934,577 and the payment of contingent acquisition consideration of $124,107, partially offset by the proceeds from the exercise of stock options of $180,800.

Net cash used in financing activities was $905,851 for the year ended June 30, 2024 and resulted from repurchase of common stock of $554,202 and the payment of contingent acquisition consideration of $351,649 pertaining to FIZ acquisition.

Net cash used in financing activities was $97,259 for the year ended June 30, 2023 and resulted from the repurchase of common stock of $104,250 and the payment of contingent acquisition consideration of $50,509 pertaining to FIZ acquisition, partially offset by the proceeds from the exercise of options of $57,500.

We 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 matured on February 28, 2024 and was not renewed.

There were no outstanding borrowings on the line of credit at maturity and all security interests and liens related to the Loan and Security Agreement have been released.

On April 15, 2024, we entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender.

On April 15, 2024, we entered into a Loan Agreement (the “PNC Loan Agreement”) with 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, 2026 and bears interest annually at the daily SOFR rate plus 2.5%, with accrued interest due and payable monthly.

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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, income 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, provision for income taxes, depreciation and amortization, stock-based compensation, income from discontinued operations and gain on sale of discontinued operations.

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.

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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.

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:

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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 7. Management’s Discussion and Analysis