What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-09-15 compared with 2022-09-23 · 29 added, 32 removed, 225 unchanged (21% of the section changed)

6 unchanged sentences

All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.

Research Solutions was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with three wholly owned subsidiaries at June 30, 2022:

Research Solutions was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with three wholly owned subsidiaries as of June 30, 2023:

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

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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.

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

The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the responses that we, 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 our 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 our customers, service providers and suppliers, all of which are uncertain and cannot be predicted.

As of the date of issuance of our financial statements, the extent to which the COVID-19 pandemic may in the future materially impact our financial condition, liquidity or results of operations is uncertain.

Inflation Risk

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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 (“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 platform (“Platforms”) and the transactional sale of STM content managed, sourced and delivered through the Platform (“Transactions”).

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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We periodically issue stock options, warrants and restricted stock to employees and non-employees for services, in capital raising transactions, and for financing costs.

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 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.

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Total operating expenses

Loss from operations

Loss from operations before provision for income taxes

Income (loss) from operations

Income (loss) from operations before provision for income taxes

Provision for income taxes

Net income (loss)

Years Ended June 30,

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

Decreased primarily due to lower paid order volume.

Increased due to higher paid order volume and pricing initiatives, including additional paid order volume due to the FIZ asset acquisition which was effective January 1, 2023.

Cost of Revenue

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Impact as percentage

Decreased primarily due to proportionally lower personnel costs.

Decreased primarily due to lower copyright expenses and proportionally lower personnel costs.

Decreased primarily due to lower software expense and proportionally lower personnel costs.

Decreased primarily due to lower personnel costs and expansion in copyright margins.

Years Ended June 30,

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Sales and marketing

Increased primarily due to greater consulting expenses, including separation cost paid to a former officer, partially offset by lower marketing spend.

Increased primarily due to greater personnel costs and marketing discretionary spend mostly offset by lower consulting expenses.

Technology and product development

Increased due to greater consulting and recruiting expenses and software development personnel costs.

Increased due to greater software development personnel costs partially offset by lower consulting and recruiting expenses.

General and administrative

Increased due to greater personnel costs and accounting, consulting and legal expenses.

Greater personnel costs include separation costs paid to a former officer and an operations director.

Increased due to greater recruiting, legal and travel expenses and personnel costs partially offset by lower accounting and consulting expenses.

Provision for Income Taxes

During the years ended June 30, 2022 and 2021, we recorded a provision for income taxes of $7,622 and $3,204, respectively, an increase of $4,418.

During the years ended June 30, 2023 and 2022 we recorded a provision for income taxes of $5,602 and $7,622, respectively, a decrease of $2,020.

Net Income (Loss)

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Net Income (Loss):

Net loss increased $1,347,295 or 472.6%, for the year ended June 30, 2022 compared to the prior year, primarily due to increased operating expenses, partially offset by increased gross profit as described above.

Net income (loss):

Net loss decreased $2,204,007 or 135%, for the year ended June 30, 2023 compared to the prior year, primarily due to increased gross profit, partially offset by increased operating expenses as described above.

Liquidity and Capital Resources

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Cash and cash equivalents, end of period

As of June 30, 2022, we had cash and cash equivalents of $10,603,175, compared to $11,004,337 as of June 30, 2021, a decrease of $401,162.

This decrease was primarily due to cash used by operating activities.

As of June 30, 2023, we had cash and cash equivalents of $13,545,333, compared to $10,603,175 as of June 30, 2022, an increase of $2,942,158.

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

Operating Activities

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 used in operating activities was $417,200 for the year ended June 30, 2022 and resulted primarily from an increase in deferred revenue of $734,175 and a decrease in prepaid royalties of $58,269, partially offset by an increase in accounts receivable of $534,092.

Net cash provided by operating activities was $1,868,406 for the year ended June 30, 2021 and resulted primarily from an increase in deferred revenue of $1,279,844 and an increase in accounts payable and accrued expenses of $337,343, partially offset by an increase in accounts receivable of $268,193.

Investing Activities

Net cash used in investing activities was $44,288 for the year ended June 30, 2022 and resulted from the purchase of property and equipment.

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.

Net cash used in investing activities was $44,288 for the year ended June 30, 2022 and resulted from the purchase of property and equipment.

Financing Activities

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, partially offset by the proceeds from the exercise of options of $57,500.

Net cash provided by financing activities was $63,270 for the year ended June 30, 2022 and resulted from the proceeds from the exercise of options of $97,688 and the proceeds from the exercise of warrants of $59,500, partially offset by the repurchase of common stock of $93,918.

Net cash used in financing activities was $159,974 for the year ended June 30, 2021 and resulted from the repurchase of stock options and warrants of $308,313 and the repurchase of common stock of $178,012, partially offset by the proceeds from the exercise of warrants of $237,501 and the proceeds from the exercise of stock options of $88,850.

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 matures on February 28, 2024, and is subject to certain financial and performance covenants with which we were in compliance as of June 30, 2022.

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.

The line of credit matures on February 28, 2024, and is subject to certain financial and performance covenants with which we

were in compliance as of June 30, 2023.

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.

The line of credit bears interest at an annual rate equal to the greater of 1% above the prime rate and 5.0%.

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As of June 30, 2023, there was approximately $2,264,000 of available credit.

On March 27, 2023, First Citizens BancShares, Inc entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase all of the assets and liabilities of SVB.

We have confirmed that the Loan and Security Agreement remains in effect post this transaction and that, in addition to having access to all of our deposits with SVB, we continue to have access to the revolving line of credit.

On March 28, 2023, we announced that we are continuing to evaluate the Loan and Security Agreement and relationship with SVB and that we have opened accounts with two additional banks as part of exploring an overall banking diversification strategy as well as additional access to lending facilities.

Non-GAAP Measure – Adjusted EBITDA

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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