Research Solutions, Inc. 10-K

Item 8. Financial Statements REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors Research Solutions, Inc. and Subsidiaries Henderson, Nevada Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Research Solutions, Inc. (the “Company”) and Subsidiaries as of June 30, 2021 and 2020, 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, 2021 and 2020, 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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. ​ Revenue recognition – Recognition of Single Article Transactions Revenue As described in Note 2 to the consolidated financial statements, the Company records transaction service fee revenue for the electronic delivery of published scientific, technical, and medical content sold as single individual articles, and records a corresponding copyright fee expense for the permitted use of the content. The Company is typically the principal in sales of these single article transactions. Sales are recognized on a gross basis with the selling price to the customer 32 Table of Contents recorded as sales and the copyright fee recognized as cost of sales. The Company recognizes revenue from these sales upon delivery to the customer provided all other revenue recognition criteria have been met. We identified the Company’s recording of the revenue for single articles as a critical audit matter because there was significant judgment applied by management in its determination of gross or net revenue recognition, including assessing the indicators that the Company controls the promised service before it was transferred to the customer, such as assessing whether the Company was primarily responsible for fulfilling the promised service and whether the Company had full discretion in establishing the prices for the promised service. In turn, this led to a high degree of auditor judgment, subjectivity and effort in performing audit procedures and evaluating the results of those procedures. ​ The primary procedures we performed to address this critical audit matter included: • We obtained and evaluated documentation prepared by management which outlines the Company’s process to determine gross versus net including evaluating the reasonableness of management’s judgments on whether the Company is acting as a principal or agent, after considering whether the Company is the primary obligation provider, and the discretion in establishing the prices by reviewing agreements with publishers and understanding the business substance • We evaluated whether the Company’s conclusion is consistent with relevant accounting standards • We selected a sample of revenue transactions and performed the following for each selection: o Obtained evidence of a contract with the customer; o Compared the amounts recognized and time of revenue recognition to underlying source documents such as invoices, form of payments, and executed contracts and related modifications, if any; o Evaluated the Company’s application of their accounting policies to determine the timing and amount recognized; and o Tested the presentation of revenue as gross or net by comparing the Company’s gross or net presentation to the attributes of the underlying support and the Company’s accounting policy. We have served as the Company’s auditor since 2006. ​ /s/ Weinberg and Company, P.A Los Angeles, California September 23, 2021 ​ 33 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2021 ​ 2020 Assets ​ ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 11,004,337 ​ $ 9,311,556 Accounts receivable, net of allowance of $ 51,495 and $ 88,485 , respectively ​ 4,717,453 ​ 4,449,260 Prepaid expenses and other current assets ​ 270,252 ​ 241,747 Prepaid royalties ​ 904,921 ​ 720,367 Total current assets ​ 16,896,963 ​ 14,722,930 ​ ​ ​ Other assets: ​ ​ Property and equipment, net of accumulated depreciation of $ 824,123 and $ 804,999 , respectively ​ 20,755 ​ 11,276 Deposits and other assets ​ 906 ​ 6,155 Right of use asset, net of accumulated amortization of $ 463,022 and $ 390,691 , respectively ​ — ​ 72,331 Total assets ​ $ 16,918,624 ​ $ 14,812,692 ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable and accrued expenses ​ $ 6,687,188 ​ $ 6,349,845 Deferred revenue ​ 4,804,351 ​ 3,524,507 Lease liability, current portion ​ — ​ 79,326 Total current liabilities ​ 11,491,539 ​ 9,953,678 ​ ​ ​ Commitments and contingencies ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ Preferred stock; $ 0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding ​ — ​ — Common stock; $ 0.001 par value; 100,000,000 shares authorized; 26,498,215 and 26,032,263 shares issued and outstanding , respectively ​ 26,498 ​ 26,032 Additional paid-in capital ​ 26,982,052 ​ 26,134,819 Accumulated deficit ​ ( 21,461,888 ) ​ ( 21,176,799 ) Accumulated other comprehensive loss ​ ( 119,577 ) ​ ( 125,038 ) Total stockholders’ equity ​ 5,427,085 ​ 4,859,014 Total liabilities and stockholders’ equity ​ $ 16,918,624 ​ $ 14,812,692 ​ See notes to consolidated financial statements ​ 34 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Revenue: ​ ​ ​ Platforms ​ $ 5,135,565 ​ $ 3,890,689 Transactions ​ 26,620,780 ​ 27,168,048 Total revenue ​ 31,756,345 ​ 31,058,737 ​ ​ ​ Cost of revenue: ​ ​ Platforms ​ 911,970 ​ 644,138 Transactions ​ 20,558,361 ​ 20,776,717 Total cost of revenue ​ 21,470,331 ​ 21,420,855 Gross profit ​ 10,286,014 ​ 9,637,882 ​ ​ ​ Operating expenses: ​ ​ Selling, general and administrative ​ 10,557,524 ​ 10,466,123 Depreciation and amortization ​ 11,522 ​ 23,654 Total operating expenses ​ 10,569,046 ​ 10,489,777 ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 283,032 ) ​ ( 851,895 ) ​ ​ ​ Other income ​ 1,147 ​ 80,044 ​ ​ ​ Loss from operations before provision for income taxes ​ ( 281,885 ) ​ ( 771,851 ) Provision for income taxes ​ ( 3,204 ) ​ ( 7,836 ) ​ ​ ​ Loss from continuing operations ​ ( 285,089 ) ​ ( 779,687 ) ​ ​ ​ Gain from sale of discontinued operations ​ — ​ 117,445 ​ ​ ​ Net loss ​ ( 285,089 ) ​ ( 662,242 ) ​ ​ ​ ​ ​ Other comprehensive income (loss): ​ ​ ​ ​ Foreign currency translation ​ 5,461 ​ ( 15,453 ) Comprehensive loss ​ $ ( 279,628 ) ​ $ ( 677,695 ) ​ ​ ​ Loss per common share: ​ ​ Loss per share from continuing operations, basic and diluted ​ $ ( 0.01 ) ​ $ ( 0.03 ) Income per share from discontinued operations, basic and diluted ​ $ — ​ $ — Net loss per share, basic and diluted ​ $ ( 0.01 ) ​ $ ( 0.03 ) Weighted average common shares outstanding, basic and diluted ​ 26,008,368 ​ 24,760,790 ​ See notes to consolidated financial statements ​ 35 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statement of Stockholders’ Equity For the Years Ended June 30, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders’ ​ Shares Amount Capital Deficit Loss Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, July 1, 2019 24,375,948 $ 24,376 $ 23,631,481 $ ( 20,514,557 ) $ ( 109,585 ) $ 3,031,715 ​ ​ ​ ​ ​ ​ Fair value of vested stock options — ​ — ​ 610,634 ​ — ​ — ​ 610,634 ​ ​ ​ ​ ​ ​ Fair value of vested restricted common stock 110,817 ​ 111 ​ 340,850 ​ — ​ — ​ 340,961 ​ ​ ​ ​ ​ ​ Repurchase of common stock ​ ( 116,200 ) ​ ( 115 ) ​ ( 321,486 ) ​ — ​ — ​ ​ ( 321,601 ) ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of stock options ​ 161,698 ​ 160 ​ ( 160 ) ​ — ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of warrants ​ 1,500,000 ​ ​ 1,500 ​ ​ 1,873,500 ​ ​ — ​ ​ — ​ ​ 1,875,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ ( 662,242 ) ​ — ​ ( 662,242 ) ​ ​ ​ ​ ​ ​ Foreign currency translation — ​ — ​ — ​ — ​ ( 15,453 ) ​ ( 15,453 ) ​ ​ ​ ​ ​ ​ Balance, June 30, 2020 26,032,263 ​ 26,032 ​ 26,134,819 ​ ( 21,176,799 ) ​ ( 125,038 ) ​ 4,859,014 ​ ​ ​ ​ ​ ​ Fair value of vested stock options — ​ — ​ 631,335 ​ — ​ — ​ 631,335 ​ ​ ​ ​ ​ ​ Fair value of vested restricted common stock 195,810 ​ 195 ​ 376,143 ​ — ​ — ​ 376,338 ​ ​ ​ ​ ​ ​ Repurchase of common stock ( 78,467 ) ​ ( 78 ) ​ ( 177,934 ) ​ — ​ — ​ ( 178,012 ) ​ ​ ​ ​ ​ ​ Repurchase of stock options and warrants ​ — ​ ​ — ​ ​ (308,313) ​ ​ ​ ​ ​ ​ ​ ​ (308,313) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of stock options 158,609 ​ 159 ​ 88,691 ​ — ​ — ​ 88,850 ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of warrants ​ 190,000 ​ ​ 190 ​ ​ 237,311 ​ ​ — ​ ​ — ​ ​ 237,501 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ ( 285,089 ) ​ — ​ ( 285,089 ) ​ ​ ​ ​ ​ ​ Foreign currency translation — ​ — ​ — ​ — ​ 5,461 ​ 5,461 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2021 26,498,215 ​ $ 26,498 ​ $ 26,982,052 ​ $ ( 21,461,888 ) ​ $ ( 119,577 ) ​ $ 5,427,085 ​ See notes to consolidated financial statements 36 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ Cash flow from operating activities: ​ ​ ​ Net loss ​ $ ( 285,089 ) ​ $ ( 662,242 ) Gain from sale of discontinued operations ​ — ​ ( 117,445 ) Loss from continuing operations ​ ​ ( 285,089 ) ​ ​ ( 779,687 ) Adjustment to reconcile net loss to net cash provided by operating activities: ​ ​ Depreciation and amortization ​ 11,522 ​ 23,654 Amortization of lease right ​ 72,331 ​ 119,914 Fair value of vested stock options ​ 631,335 ​ 610,634 Fair value of vested restricted common stock ​ 376,338 ​ 340,961 Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 268,193 ) ​ 43,909 Prepaid expenses and other current assets ​ ( 28,505 ) ​ 199,289 Prepaid royalties ​ ( 184,554 ) ​ ( 720,367 ) Deposits and other assets ​ 5,360 ​ 8,094 Accounts payable and accrued expenses ​ 337,343 ​ 1,486,950 Deferred revenue ​ 1,279,844 ​ 1,214,301 Lease liability ​ ( 79,326 ) ​ ( 129,187 ) Net cash provided by operating activities ​ 1,868,406 ​ 2,418,465 ​ ​ ​ Cash flow from investing activities: ​ ​ Purchase of property and equipment ​ ( 19,854 ) ​ — Net cash used in investing activities ​ ( 19,854 ) ​ — ​ ​ ​ Cash flow from financing activities: ​ ​ Proceeds from the exercise of stock options ​ ​ 88,850 ​ ​ — Proceeds from the exercise of warrants ​ ​ 237,501 ​ ​ 1,875,000 Common stock repurchase and retirement ​ ​ ( 178,012 ) ​ ​ ( 321,601 ) Repurchase of stock options and warrants ​ ​ ( 308,313 ) ​ ​ — Net cash provided by (used in) financing activities ​ ( 159,974 ) ​ 1,553,399 ​ ​ ​ Effect of exchange rate changes ​ 4,203 ​ ( 13,398 ) Net increase in cash and cash equivalents ​ 1,692,781 ​ 3,958,466 Cash and cash equivalents, beginning of period ​ 9,311,556 ​ 5,353,090 Cash and cash equivalents, end of period ​ $ 11,004,337 ​ $ 9,311,556 ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ Cash paid for income taxes ​ $ 3,204 ​ $ 7,836 ​ See notes to consolidated financial statements ​ 37 Table of Contents RESEARCH SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended June 30, 2021 and 2020 ​ Note 1. Organization, Nature of Business and Basis of Presentation Organization Research Solutions, Inc. (the “Company,” “Research Solutions,” “we,” “us” or “our”) was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with two wholly owned subsidiaries at June 30, 2021: Reprints Desk, Inc., a Delaware corporation and Reprints Desk Latin America S. de R.L. de C.V, an entity organized under the laws of Mexico. Nature of Business We provide two service offerings to our customers: a cloud-based software-as-a-service (“SaaS”) research platform (“Platforms”) typically sold via annual auto-renewing license agreements and the sale of published scientific, technical, and medical (“STM”) content sold as individual articles (“Transactions”) either stand alone or via the Platform. When customers utilize the Platform to purchase Transactions it is packaged as a single solution that enables life science and other research intensive organizations to accelerate their research and development activities with faster, access and management of STM articles used throughout the intellectual property development lifecycle. The Platform typically delivers a ROI to the customer via more effectively managing Transaction costs and saving researchers time during the research process. Platforms Our cloud-based SaaS research 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. Additional functionality has recently been added to our Platform in the form of interactive app-like components. An alternative to manual data filtering, identification and extraction, the apps are designed to gather, augment, and extract data across a variety of formats, including bibliographic citations, tables of contents, RSS feeds, PDF files, XML feeds, and web content. We continue to develop new apps in order to build an ecosystem of apps. Together, these apps will provide researchers with an “all in one” toolkit, delivering efficiencies in core research workflows and knowledge creation processes. 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. Transactions 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. Our Platform allows customers 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 many cases under one minute. This service is generally known in the industry 38 Table of Contents 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 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. Principles of Consolidation The accompanying financial statements are consolidated and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. ​ ​ Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates. These estimates and assumptions include estimates for reserves of uncollectible accounts, accruals for potential liabilities, assumptions made in valuing equity instruments issued for services or acquisitions, and realization of deferred tax assets. Cash and cash equivalents For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with an original maturity of three months or less. In all periods presented, cash equivalents consist primarily of money market funds. Fair value of financial instruments Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures , fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. Level 3 – Unobservable inputs based on the Company’s assumptions. The Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value items required to be disclosed as of June 30, 2021 or 2020 under these requirements. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. Allowance for doubtful accounts The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of 39 Table of Contents past due trade accounts receivable outstanding. The Company established an allowance for doubtful accounts of $ 51,495 and $ 88,485 as of June 30, 2021 and 2020, respectively. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivable. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $ 250,000 insurance limit. The Company does not anticipate incurring any losses related to these credit risks. The Company extends credit based on an evaluation of the customer’s financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required. Cash denominated in Euros with a US Dollar equivalent of $ 88,807 and $ 134,175 at June 30, 2021 and 2020, respectively, was held in accounts at financial institutions located in Europe. The Company has no customers that represent 10 % of revenue or more for the years ended June 30, 2021 and 2020. The following table summarizes accounts receivable concentrations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of ​ ​ June 30, ​ ​ June 30, ​ ​ 2021 2020 ​ Customer A ​ 14 % ​ * ​ ​ * Less than 10% The following table summarizes our content costs from our vendors: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, ​ ​ 2021 2020 ​ Vendor A ​ 20 % ​ 21 % Vendor B ​ 13 % ​ 13 % Vendor C ​ * ​ ​ 10 % ​ * Less than 10% ​ Property and equipment Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of 3 to 7 years . Leasehold improvements are amortized over the shorter of the useful lives of the related assets, or the lease term. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the consolidated statements of operations. Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended June 30, 2021 and 2020, the Company did not recognize any impairments for its property and equipment. Revenue Recognition The Company accounts for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), ("ASC 606"). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or 40 Table of Contents services to customers at the amount expected to be collected. The Company adopted the guidance of ASC 606 on July 1, 2018. Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company derives its revenues from two sources: annual licenses that allow customers to access and utilize certain premium features of our cloud-based SaaS research intelligence platform (“Platforms”) and the transactional sale of STM content managed, sourced and delivered through the Platform (“Transactions”). The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to performance obligations in the contract; and ● recognize revenue as the performance obligation is satisfied. Platforms We charge a subscription fee that allows customers to access and utilize certain premium features of our Platform. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue. Transactions We charge a transactional service fee for the electronic delivery of single articles, and a corresponding copyright fee for the permitted use of the content. We recognize revenue from single article delivery services upon delivery to the customer provided all other revenue recognition criteria have been met. 41 Table of Contents Revenue by Geographical Region The following table summarizes revenue by geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, ​ ​ 2021 ​ 2020 ​ United States $ 17,757,521 55.9 % ​ $ 17,219,763 ​ 55.4 % Europe ​ 11,590,169 36.5 % ​ 11,388,620 36.7 % Rest of World ​ 2,408,655 7.6 % ​ 2,450,354 7.9 % Total ​ $ 31,756,345 100 % ​ $ 31,058,737 100 % ​ Accounts Receivable by Geographical Region The following table summarizes accounts receivable by geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, ​ ​ 2021 ​ 2020 ​ United States $ 2,798,224 59.3 % ​ $ 2,670,674 ​ 60.0 % Europe ​ 1,650,030 35.0 % ​ 1,553,706 34.9 % Rest of World ​ 269,199 5.7 % ​ 224,880 5.1 % Total ​ $ 4,717,453 100 % ​ $ 4,449,260 100 % ​ Cost of Revenue Platforms Cost of Platform revenue consists primarily of personnel costs of our operations team, and to a lesser extent managed hosting providers and other third-party service and data providers. Transactions Cost of Transaction revenue consists primarily of the respective copyright fee for the permitted use of the content, less a discount in most cases, and to a much lesser extent, personnel costs of our operations team and third-party service providers. 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. Under ASC 718, Repurchase or Cancellation of equity awards, the amount of cash or other assets transferred (or liabilities incurred) to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of the equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost. 42 Table of Contents Foreign Currency The accompanying consolidated financial statements are presented in United States dollars, the functional currency of the Company. Capital accounts of foreign subsidiaries are translated into US Dollars from foreign currency at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rate as of the balance sheet date. Income and expenditures are translated at the average exchange rate of the period. Although the majority of our revenue and costs are in US dollars, the costs of Reprints Desk Latin America are in Mexican Pesos. As a result, currency exchange fluctuations may impact our revenue and the costs of our operations. We currently do not engage in any currency hedging activities. Gains and losses from foreign currency transactions, which result from a change in exchange rates between the functional currency and the currency in which a foreign currency transaction is denominated, are included in selling, general and administrative expenses and amounted to a gain of $ 35,960 and a loss of $ 19,529 for the years ended June 30, 2021 and 2020, respectively. Cash denominated in Euros with a US Dollar equivalent of $ 88,807 and $ 134,175 at June 30, 2021 and 2020, respectively, was held in accounts at financial institutions located in Europe. The following table summarizes the exchange rates used: ​ ​ ​ ​ ​ ​ ​ Year Ended ​ June 30, ​ 2021 2020 Period end Euro : US Dollar exchange rate ​ 1.19 ​ 1.12 Average period Euro : US Dollar exchange rate ​ 1.19 1.11 ​ ​ ​ ​ Period end Mexican Peso : US Dollar exchange rate ​ 0.05 0.04 Average period Mexican Peso : US Dollar exchange rate ​ 0.05 0.05 ​ 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. Potential common shares are excluded from the computation when their effect is antidilutive. At June 30, 2021 potentially dilutive securities include options to acquire 3,258,408 shares of common stock, warrants to acquire 50,000 shares of common stock and unvested restricted common stock of 245,252 . 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 . 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 loss per common share is the same for the years ended June 30, 2021 and 2020 because all stock options, warrants, and unvested restricted common stock are anti-dilutive. Income taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 43 Table of Contents Recently Issued Accounting Pronouncements 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 cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. ​ Note 3. Property and Equipment Property and equipment consists of the following as of June 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2021 ​ 2020 Computer equipment ​ $ 522,296 ​ $ 495,585 Software ​ 282,080 ​ 282,080 Furniture and fixtures ​ 40,502 ​ 38,610 Total ​ 844,878 ​ 816,275 Less accumulated depreciation ​ ( 824,123 ) ​ ( 804,999 ) Net, Property and equipment ​ $ 20,755 ​ $ 11,276 ​ Depreciation expense for the years ended June 30, 2021 and 2020 was $ 11,522 and $ 23,654 , respectively. ​ Note 4 . Line of Credit 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 February 14, 2022 , and is subject to certain financial and performance covenants with which we were in compliance as of June 30, 2021. 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, 2021. The line of credit is secured by the Company’s consolidated assets. There were no outstanding borrowings under the line as of June 30, 2021 and June 30, 2020, respectively. As of June 30, 2021, there was approximately $ 1,489,000 of available credit. ​ Note 5. Lease Obligations On December 30, 2016, the Company entered into a 48 month non-cancellable lease for its office facilities that will require monthly payments ranging from $ 10,350 to $ 11,475 through January 2021. In accounting for the lease, the Company adopted ASU 2016-02, Leases which requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease initially measured at the present value of the lease payments. 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, 2021, the Company made payments of $ 79,326 towards the lease liability. As of June 30, 2021 and 2020, lease liability amounted to $ 0 and $ 79,326 , 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 basis. Rent expense, including real estate 44 Table of Contents taxes, for the years ended June 30, 2021 and 2020 was $ 39,658 and $ 111,746 , respectively. The right of use asset at June 30, 2020 was $ 72,331 . During the years ended June 30, 2021 and 2020, the Company reflected amortization of right of use asset of $ 72,331 and $ 119,914 related to this lease, respectively, resulting in a net asset balance of $ 0 as of June 30, 2021. ​ Note 6. Stockholders’ Equity Stock Options In December 2007, we established the 2007 Equity Compensation Plan (the “2007 Plan”) and in November 2017 we established the 2017 Omnibus Incentive Plan (the “2017 Plan”), collectively (the “Plans”). The Plans were approved by our board of directors and stockholders. The purpose of the Plans is to grant stock and options to purchase our common stock, and other incentive awards, to our employees, directors and key consultants. On November 10, 2016, the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2007 Plan increased from 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. Upon 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. On November 12, 2019, the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2017 Plan increased from 1,874,513 to 2,374,513 . On November 17, 2020, 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 2,374,513 to 3,374,513 . As of June 30, 2021, there were 1,100,021 shares available for grant under the 2017 Plan, and no shares were available for grant under the 2007 Plan. 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. The majority of awards issued under the Plan vest immediately or over three years , with a one year cliff vesting period, and have a term of ten years . Stock-based compensation cost is measured at the grant date, based on the fair value of the awards that are ultimately expected to vest, and recognized on a straight-line basis over the requisite service period, which is generally the vesting period. The following table summarizes vested and unvested stock option activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All Options ​ Vested Options ​ Unvested Options ​ ​ Weighted ​ Weighted ​ Weighted ​ ​ ​ ​ Average ​ ​ ​ Average ​ ​ ​ Average ​ ​ ​ ​ Exercise ​ ​ ​ Exercise ​ ​ ​ Exercise ​ ​ Shares ​ Price ​ Shares ​ Price ​ Shares ​ Price Outstanding at July 1, 2019 3,287,335 ​ 1.38 2,827,251 ​ 1.27 460,084 ​ 2.09 Granted 324,000 ​ 3.04 250,000 ​ 3.13 74,000 ​ 2.72 Options vesting — ​ — 278,249 ​ 2.05 ( 278,249 ) ​ 2.05 Exercised ( 263,755 ) ​ 1.16 ( 263,755 ) ​ 1.16 — ​ — Forfeited/Cancelled ( 20,000 ) ​ 1.95 ( 10,000 ) ​ 1.95 ( 10,000 ) ​ 1.95 Outstanding at June 30, 2020 3,327,580 $ 1.56 3,081,745 $ 1.50 245,835 $ 2.34 Granted 575,348 ​ 2.28 270,000 ​ 2.25 305,348 ​ 2.31 Options vesting — ​ — 199,499 ​ 2.16 ( 199,499 ) ​ 2.16 Exercised ( 274,520 ) ​ 1.34 ( 274,520 ) ​ 1.34 — ​ — Forfeited ( 126,250 ) ​ 2.59 ( 102,500 ) ​ 2.72 ( 23,750 ) ​ 1.99 Repurchased ( 243,750 ) ​ 1.32 ( 243,750 ) ​ 1.32 — ​ — Outstanding at June 30, 2021 3,258,408 ​ $ 1.68 2,930,474 ​ $ 1.60 327,934 ​ $ 2.46 ​ 45 Table of Contents The following table presents the assumptions used to estimate the fair values based upon a Black-Scholes option pricing model of the stock options granted during the years ended June 30, 2021 and 2020. ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ ​ 2021 2020 ​ Expected dividend yield ​ 0 % 0 % Risk-free interest rate ​ 0.37 - 1.05 % 0.43 - 1.69 % Expected life (in years) ​ 5 - 6 5 - 6 ​ Expected volatility ​ 56 - 63 % 62 - 64 % ​ The weighted average remaining contractual life of all options outstanding as of June 30, 2021 was 5.45 years. The remaining contractual life for options vested and exercisable at June 30, 2021 was 4.96 years. Furthermore, the aggregate intrinsic value of options outstanding as of June 30, 2021 was $ 3,897,018 , and the aggregate intrinsic value of options vested and exercisable at June 30, 2021 was $ 3,752,794 , in each case based on the fair value of the Company’s common stock on June 30, 2021. During the year ended June 30, 2021, the Company granted 575,348 options to employees with a fair value of $ 686,461 which amount will be amortized over the vesting period. The total fair value of options that vested during the year ended June 30, 2021 was $ 631,335 and was included in selling, general and administrative expenses in the accompanying statement of operations. As of June 30, 2021, the amount of unvested compensation related to the unvested options was $ 340,692 which will be recorded as an expense in future periods as the options vest. During the year ended June 30, 2021, the Company issued 158,609 net shares of common stock upon the exercise of options underlying 274,520 shares of common stock, resulting in net cash proceeds of $ 88,850 . On March 31, 2021 the Company repurchased options underlying 243,750 shares of stock from a former director for $ 213,313 . The entire amount was charged to equity. During the year ended 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 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. 46 Table of Contents Additional information regarding stock options outstanding and exercisable as of June 30, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option ​ Remaining ​ ​ Exercise ​ Options ​ Contractual ​ Options ​ Price ​ Outstanding ​ Life (in years) ​ Exercisable $ 0.59 8,150 1.00 8,150 ​ 0.60 5,000 1.00 5,000 ​ 0.65 6,150 1.00 6,150 ​ 0.70 225,000 4.43 225,000 ​ 0.77 49,500 2.08 49,500 ​ 0.80 16,000 4.14 16,000 ​ 0.90 25,667 2.81 25,667 ​ 0.97 6,000 1.00 6,000 ​ 1.00 28,249 2.43 28,249 ​ 1.02 2,000 1.00 2,000 ​ 1.05 315,529 5.01 315,529 ​ 1.07 33,898 1.29 33,898 ​ 1.09 75,000 4.12 75,000 ​ 1.10 105,000 4.00 105,000 ​ 1.15 128,400 1.61 128,400 ​ 1.20 274,000 6.05 274,000 ​ 1.25 32,000 1.62 32,000 ​ 1.30 243,000 0.68 243,000 ​ 1.50 185,000 1.48 185,000 ​ 1.59 25,000 6.87 25,000 ​ 1.80 94,050 2.13 94,050 ​ 1.85 17,800 1.80 17,800 ​ 1.95 200,000 7.01 200,000 ​ 2.13 ​ 216,708 ​ 9.39 ​ 200,000 ​ 2.17 ​ 35,955 ​ 9.87 ​ — ​ 2.40 338,667 7.38 326,000 ​ 2.43 ​ 61,250 ​ 9.93 ​ 31,250 ​ 2.45 ​ 173,000 ​ 9.10 ​ — ​ 2.49 ​ 88,435 ​ 8.84 ​ 45,832 ​ 2.50 ​ 20,000 ​ 7.88 ​ 15,000 ​ 2.99 ​ 8,000 ​ 8.87 ​ 3,333 ​ 3.13 ​ 208,000 ​ 8.38 ​ 204,666 ​ 3.50 ​ 8,000 ​ 8.62 ​ 4,000 ​ Total ​ 3,258,408 ​ ​ ​ 2,930,474 ​ 47 Table of Contents Warrants The following table summarizes warrant activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Exercise ​ ​ Warrants ​ Price Outstanding, June 30, 2019 1,885,000 ​ $ 1.25 Granted — ​ — Exercised ( 1,500,000 ) ​ 1.25 Expired/Cancelled — ​ — Outstanding, June 30, 2020 385,000 ​ $ 1.24 Granted — ​ — Exercised ( 190,000 ) ​ 1.25 Repurchased ( 100,000 ) ​ 1.25 Expired/Cancelled ( 45,000 ) ​ 1.25 Outstanding, June 30, 2021 50,000 ​ $ 1.19 Exercisable, June 30, 2020 385,000 ​ $ 1.24 Exercisable, June 30, 2021 50,000 ​ $ 1.19 ​ The intrinsic value for all warrants outstanding as of June 30, 2021 was $ 83,500 , based on the fair value of the Company’s common stock on June 30, 2021. During the year ended June 30, 2021, 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 190,000 shares, generating gross proceeds to the Company of $ 237,501 . On March 31, 2021 the Company repurchased warrants underlying 100,000 shares of stock from a former director for $ 95,000 . The entire amount was charged to equity. 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 . Additional information regarding warrants outstanding and exercisable as of June 30, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ Warrant ​ Warrants ​ Contractual ​ Warrants ​ Exercise Price ​ Outstanding ​ Life (in years) ​ Exercisable $ 1.19 50,000 0.48 50,000 ​ Total 50,000 50,000 ​ Restricted Common Stock Prior to July 1, 2019, the Company issued 2,166,549 shares of restricted common stock to employees valued at $ 2,198,240 , of which $ 1,785,857 had been recognized as an expense. As of June 30, 2019, 311,535 of these shares with a grant date fair value of $ 412,383 had not yet vested. 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 $ 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. 48 Table of Contents During the year ended June 30, 2021, the Company issued an additional 195,810 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 $ 463,994 based on the market price of our common stock ranging from $ 2.13 to $ 2.49 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, 2021 and 2020 was $ 376,338 and $ 340,961 , respectively, and is included in selling, general and administrative expenses in the accompanying statements of operations. As of June 30, 2021, the amount of unvested compensation related to issuances of restricted common stock was $ 481,953 , 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 common stock activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Number of ​ ​ ​ ​ Grant Date ​ ​ Shares ​ Fair Value ​ Fair Value Non-vested, June 30, 2019 311,535 ​ ​ 412,383 ​ $ 1.66 Granted 110,817 ​ 322,875 ​ 2.91 Vested ( 230,497 ) ​ ( 340,961 ) ​ 1.56 Forfeited — ​ — ​ — Non-vested, June 30, 2020 191,855 ​ $ 394,297 ​ $ 2.51 Granted 195,810 ​ 463,994 ​ 2.37 Vested ( 142,413 ) ​ ( 376,338 ) ​ 2.37 Forfeited — ​ — ​ — Non-vested, June 30, 2021 245,252 ​ $ 481,953 ​ $ 2.47 ​ Common Stock Repurchase and Retirement 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. The actual number of shares repurchased will be determined by applicable employees in their discretion, and will depend on their evaluation of market conditions and other factors. Effective as of February 9, 2021, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2021 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. The actual number of shares repurchased will be determined by applicable employees in their discretion, and will depend on their evaluation of market conditions and other factors. During the years ended June 30, 2021 and 2020, we repurchased approximately 78,467 and 116,200 shares of our common stock under the repurchase plan at an average price of approximately $ 2.27 and $ 2.77 per share, respectively, for an aggregate amount of $ 178,012 and $ 321,601 , respectively. As of June 30, 2021, $ 349,263 remains under the current authorization to repurchase our outstanding common stock from our employees. Shares repurchased are retired and deducted from common stock for par value and from additional paid in capital for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares. 49 Table of Contents The following table summarizes repurchases of our common stock on a monthly basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares Approximate Dollar Value ​ ​ Total Number ​ Average ​ Purchased as Part of ​ of Shares that May Yet Be ​ ​ of Shares ​ Price Paid ​ Publicly Announced ​ Purchased Under the Period ​ Purchased 1 ​ per Share ​ Plans or Programs ​ Plans or Programs September 2019 28,750 ​ $ 2.50 — ​ — December 2019 42,500 ​ $ 3.00 — ​ — March 2020 25,150 ​ $ 2.75 — ​ — June 2020 19,800 ​ $ 2.68 — ​ — Year ended June 30, 2020 116,200 ​ $ 2.77 — ​ — ​ ​ ​ ​ ​ September 2020 25,500 ​ $ 2.29 — ​ — December 2020 31,167 ​ $ 2.21 — ​ — March 2021 10,750 ​ $ 2.15 — ​ $ 376,888 June 2021 11,050 ​ $ 2.50 — ​ $ 349,263 Year ended June 30, 2021 78,467 ​ $ 2.27 — ​ $ 349,263 ​ 1 Consists of shares of common stock purchased from employees to satisfy tax obligations in connection with the vesting of stock incentive awards. ​ Note 7. Contingencies and Commitments COVID-19 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 The Company is involved in legal proceedings in the ordinary course of its business. Although management of the Company cannot predict the ultimate outcome of these legal proceedings with certainty, it believes that the ultimate resolution of the Company’s legal proceedings, including any amounts it may be required to pay, will not have a material effect on the Company’s consolidated financial statements. ​ 50 Table of Contents Note 8. Income Taxes The provision for income taxes consists of the following for the years ended June 30, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ 2021 2020 Current ​ ​ Federal ​ $ — ​ $ — State ​ 2,319 ​ 2,201 Foreign (Mexico) ​ 885 ​ 5,635 Deferred ​ ​ ​ ​ Federal ​ — ​ — Foreign ​ — ​ — State ​ — ​ — Provision for income tax expense ​ $ 3,204 ​ $ 7,836 ​ During the year ended June 30, 2021, the Company recorded a provision for income tax expense of $ 3,204 which consisted of $ 2,319 in state income tax payments and $ 885 in foreign (Mexico) income tax payments. During the year ended 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. ​ The reconciliation of the effective income tax rate to the federal statutory rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ 2021 2020 Federal income tax rate 21.0 % 21.0 % State tax, net of federal benefit 5.0 % 5.0 % Permanent differences 3.0 % 3.2 % Change in valuation allowance ( 30.1 ) % ( 30.4 ) % Effective income tax rate ( 1.1 ) % ( 1.2 ) % ​ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2021 and 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2021 ​ 2020 Deferred tax assets: ​ ​ Federal net operating loss carryforward ​ $ 2,344,543 ​ $ 2,508,894 State net operating loss carryforward ​ 285,568 ​ 354,752 Intangibles amortization ​ 156,196 ​ 156,196 Stock based compensation ​ 1,762,884 ​ 1,551,272 Other ​ 197,401 ​ 186,901 Total deferred tax assets ​ 4,746,592 ​ 4,758,015 Deferred tax liability: ​ ​ ​ ​ Fixed asset depreciation ​ 49,487 ​ 49,167 Net deferred tax assets ​ 4,796,079 ​ 4,807,182 Less valuation allowance ​ ( 4,796,079 ) ​ ( 4,807,182 ) ​ ​ $ — ​ $ — ​ The Company has provided a valuation allowance on the deferred tax assets at June 30, 2021 and 2020 to reduce such asset to zero , since there is no assurance that the Company will generate future taxable income to utilize such asset. 51 Table of Contents 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, 2021 was a decrease of $ 11,103 . At June 30, 2021 and 2020, the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 15,030,000 and $ 13,800,000 , respectively, and state NOL carryforwards of approximately $ 6,410,000 and $ 6,780,000 , respectively. Federal NOLs generated in 2018, 2019 and 2020 can be carried forward indefinitely with some limitations, NOLs generated prior to 2018 could, if unused, completely expire in 2038 . State NOLs, if unused, completely expire in 2041 . Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of June 30, 2021 and 2020, 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, 2021 and 2020, the Company has no accrued interest or penalties related to uncertain tax positions. Company is subject to taxation in the United States and various states and Mexico. The Company is subject to United States federal or state income tax examinations by tax authorities for fiscal years after 2017. ​ Note 9. Gain from Sale of Discontinued 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. 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. ​ Note 10. Subsequent Events Stock Options On August 5, 2021, the Company granted stock options underlying 30,882 shares of common stock to employees with a fair value of approximately $ 40,000 . The options vest over a three-year period, and have a term of ten years . On September 16, 2021 the Company granted stock options underlying 33,195 shares of common stock to employees with a fair value of approximately $ 46,000 . The options vest over a three-year period, and have a term of ten years . Restricted Common Stock On August 5, 2021, the Company issued 115,909 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 value of the stock award was $ 306,000 based on the market price of our common stock of $ 2.64 per share on the date of grant, which will be amortized over the three-year vesting period. ​ ​ 52 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There were no changes in or disagreements with our accountants on accounting and financial disclosure during the last two fiscal years. ​