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. and Subsidiaries (the “Company”) as of June 30, 2024 and 2023, the related consolidated statements of operations and other comprehensive income (loss), changes in 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, 2024 and 2023, 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 audit, 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 the 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. ​ Valuation of Developed Technology Asset Acquired and Contingent Earnout Liability Related to Acquisitions of ResoluteAI and Scite ​ As described in Note 9 to the consolidated financial statements, in July 2023 and December 2023, the Company completed the acquisitions of ResoluteAI and Scite, respectively, for total consideration of $25.9 million, including contingent consideration of $9 million. In connection with the acquisitions, the Company acquired $10.9 million of intangible assets, including $10.8 million for developed technology assets. The developed technology assets were valued using the multi- 35 Table of Contents period excess earnings method under the income approach. The present value of projected future cash flows included significant judgment and assumptions regarding projected future revenues, projected expenses, and the discount rate for the technology asset. The fair value of the contingent earnout liability is calculated using Monte Carlo simulation based on corresponding projected recurring revenue, as defined in the acquisition agreements. ​ We identified the valuation of the acquired developed technology assets and the contingent earnout liabilities in connection with the acquisitions of ResoluteAI and Scite as a critical audit matter because of the significant judgement by management when developing the fair value estimate of the developed technology assets acquired and the contingent earnout liability. This required a high degree of auditor judgment and an increased extent of effort, when performing procedures to evaluate the reasonableness of management’s assumptions related to projected future revenues, projected expenses, and the discount rate for the technology asset. ​ The primary procedures we performed to address this critical audit matter included: ​ • We evaluated the appropriateness of the valuation methods used to determine the respective fair values. • We assessed the reasonableness of forecasted revenue and costs including comparing the forecasts prepared by management to historical revenue and costs. • We performed procedures to verify the mathematical accuracy of the calculations used by management. • We examined the acquisition agreements to identify relevant terms of the acquisitions. • We assessed the appropriateness of the presentation and disclosure of these accounting elements in the financial statements. ​ We have served as the Company’s auditor since 2006. ​ /s/ Weinberg and Company, P.A Los Angeles, California September 20, 2024 PCAOB ID: 572 ​ 36 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2024 ​ 2023 Assets ​ ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 6,100,031 ​ $ 13,545,333 Accounts receivable, net of allowance of $ 68,579 and $ 85,015 , respectively ​ 6,879,800 ​ 6,153,063 Prepaid expenses and other current assets ​ 643,553 ​ 400,340 Prepaid royalties ​ 1,067,237 ​ 1,202,678 Total current assets ​ 14,690,621 ​ 21,301,414 ​ ​ ​ ​ ​ ​ ​ Non-current assets: ​ ​ Property and equipment, net of accumulated depreciation of $ 922,558 and $ 881,908 , respectively ​ 88,011 ​ 70,193 Intangible assets, net of accumulated amortization of $ 1,535,310 and $ 747,355 , respectively ($ 8,343,056 provisional) ​ ​ 10,764,261 ​ ​ 462,068 Goodwill ($ 13,171,486 provisional) ​ 16,315,888 ​ — Deposits and other assets ​ 981 ​ 1,052 Total assets ​ $ 41,859,762 ​ $ 21,834,727 ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable and accrued expenses ​ $ 8,843,612 ​ $ 8,079,516 Deferred revenue ​ 9,023,848 ​ 6,424,724 Total current liabilities ​ 17,867,460 ​ 14,504,240 ​ ​ ​ ​ ​ ​ ​ Non-current liabilities: ​ ​ Contingent earnout liability ​ 12,298,114 ​ — Total liabilities ​ 30,165,574 ​ 14,504,240 ​ ​ ​ 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; 32,295,373 and 29,487,508 shares issued and outstanding , respectively ​ 32,295 ​ 29,487 Additional paid-in capital ​ 38,089,958 ​ 29,941,873 Accumulated deficit ​ ( 26,309,246 ) ​ ( 22,522,649 ) Accumulated other comprehensive loss ​ ( 118,819 ) ​ ( 118,224 ) Total stockholders’ equity ​ 11,694,188 ​ 7,330,487 Total liabilities and stockholders’ equity ​ $ 41,859,762 ​ $ 21,834,727 ​ See notes to consolidated financial statements ​ 37 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statements of Operations and Other Comprehensive Income (Loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Revenue: ​ ​ ​ Platforms ​ $ 13,956,517 ​ $ 8,683,246 Transactions ​ 30,667,382 ​ 29,020,206 Total revenue ​ 44,623,899 ​ 37,703,452 ​ ​ ​ Cost of revenue: ​ ​ Platforms ​ 2,067,203 ​ 1,027,286 Transactions ​ 22,916,530 ​ 21,975,275 Total cost of revenue ​ 24,983,733 ​ 23,002,561 Gross profit ​ 19,640,166 ​ 14,700,891 ​ ​ ​ Operating expenses: ​ ​ Selling, general and administrative ​ 19,573,438 ​ 14,409,634 Depreciation and amortization ​ 836,271 ​ 52,649 Total operating expenses ​ 20,409,709 ​ 14,462,283 ​ ​ ​ ​ ​ ​ ​ Income (loss) from operations ​ ( 769,543 ) ​ 238,608 ​ ​ ​ Other income ​ 333,088 ​ 338,617 Change in fair value of contingent earnout liability ​ ​ ( 3,237,071 ) ​ ​ — ​ ​ ​ Income (loss) from operations before provision for income taxes ​ ( 3,673,526 ) ​ 577,225 Provision for income taxes ​ ( 113,071 ) ​ ( 5,602 ) ​ ​ ​ Net income (loss) ​ ( 3,786,597 ) ​ 571,623 ​ ​ ​ Other comprehensive income (loss): ​ ​ ​ ​ Foreign currency translation ​ ( 595 ) ​ 3,717 Comprehensive income (loss) ​ $ ( 3,787,192 ) ​ $ 575,340 ​ ​ ​ ​ ​ ​ ​ Basic income (loss) per common share: ​ ​ ​ ​ ​ ​ Net income (loss) per share ​ $ ( 0.13 ) ​ $ 0.02 Weighted average common shares outstanding ​ ​ 28,863,949 ​ ​ 26,860,761 ​ ​ ​ Diluted income (loss) per common share: ​ ​ ​ ​ ​ ​ Net income (loss) per share ​ $ ( 0.13 ) ​ $ 0.02 Weighted average common shares outstanding ​ ​ 28,863,949 ​ ​ 29,139,759 ​ See notes to consolidated financial statements ​ 38 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended June 30, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Comprehensive ​ Stockholders’ ​ Shares Amount Capital Deficit Loss Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, July 1, 2022 27,075,648 $ 27,076 $ 28,072,855 $ ( 23,094,272 ) $ ( 121,941 ) $ 4,883,718 ​ ​ ​ ​ ​ ​ Fair value of vested stock options — ​ — ​ 375,189 ​ — ​ — ​ 375,189 ​ ​ ​ ​ ​ ​ Fair value of vested restricted common stock 2,354,834 ​ 2,355 ​ 1,416,363 ​ — ​ — ​ 1,418,718 ​ ​ ​ ​ ​ ​ Forfeited restricted common stock ​ ( 65,165 ) ​ ​ ( 65 ) ​ ​ 65 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value of vested unrestricted common stock ​ 36,509 ​ ​ 36 ​ ​ 68,236 ​ ​ — ​ ​ — ​ ​ 68,272 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repurchase of common stock ​ ( 51,841 ) ​ ( 52 ) ​ ( 104,198 ) ​ — ​ — ​ ( 104,250 ) ​ ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of stock options ​ 137,523 ​ 137 ​ 57,363 ​ — ​ — ​ 57,500 ​ ​ ​ ​ ​ ​ ​ Modification cost of stock options ​ — ​ — ​ 56,000 ​ — ​ — ​ 56,000 ​ ​ ​ ​ ​ ​ ​ ​ Net income for the period — ​ — ​ — ​ 571,623 ​ — ​ 571,623 ​ ​ ​ ​ ​ ​ ​ Foreign currency translation — ​ — ​ — ​ — ​ 3,717 ​ 3,717 ​ ​ ​ ​ ​ ​ Balance, June 30, 2023 29,487,508 ​ 29,487 ​ 29,941,873 ​ ( 22,522,649 ) ​ ( 118,224 ) ​ 7,330,487 ​ ​ ​ ​ ​ ​ Fair value of vested stock options — ​ — ​ 140,150 ​ — ​ — ​ 140,150 ​ ​ ​ ​ ​ ​ Fair value of vested restricted common stock 405,000 ​ 405 ​ 1,993,957 ​ — ​ — ​ 1,994,362 ​ ​ ​ ​ ​ ​ Forfeited restricted common stock ​ ( 200,000 ) ​ ​ ( 200 ) ​ ​ 200 ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Repurchase of common stock ( 198,383 ) ​ ( 198 ) ​ ( 554,004 ) ​ — ​ — ​ ( 554,202 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued upon exercise of stock options 72,234 ​ 72 ​ ​ ( 72 ) ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock issued for acquisition of Scite ​ 2,729,014 ​ ​ 2,729 ​ ​ 6,546,905 ​ ​ — ​ ​ — ​ ​ 6,549,634 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Modification cost of accelerated vesting of restricted common stock — ​ ​ — ​ ​ 20,949 ​ ​ — ​ ​ — ​ ​ 20,949 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss for the period — ​ — ​ ​ — ​ ( 3,786,597 ) ​ — ​ ( 3,786,597 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation — ​ — ​ — ​ — ​ ( 595 ) ​ ( 595 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, June 30, 2024 32,295,373 ​ $ 32,295 ​ $ 38,089,958 ​ $ ( 26,309,246 ) ​ $ ( 118,819 ) ​ $ 11,694,188 ​ See notes to consolidated financial statements 39 Table of Contents Research Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Cash flow from operating activities: ​ ​ ​ Net income (loss) ​ $ ( 3,786,597 ) ​ $ 571,623 Adjustment to reconcile net income (loss) to net cash provided by operating activities: ​ ​ Depreciation and amortization ​ 836,271 ​ 52,649 Fair value of vested stock options ​ 140,150 ​ 375,189 Fair value of vested restricted common stock ​ 1,994,362 ​ 1,418,718 Fair value of vested unrestricted common stock ​ ​ — ​ ​ 68,272 Modification cost of accelerated vesting of restricted common stock ​ ​ 20,949 ​ ​ 56,000 Adjustment to contingent earnout liability ​ ​ 3,237,071 ​ ​ — Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 344,020 ) ​ ( 901,518 ) Prepaid expenses and other current assets ​ ( 164,579 ) ​ ( 124,314 ) Prepaid royalties ​ 135,441 ​ ( 356,026 ) Accounts payable and accrued expenses ​ 560,027 ​ 1,337,056 Deferred revenue ​ 921,879 ​ 886,198 Net cash provided by operating activities ​ 3,550,954 ​ 3,383,847 ​ ​ ​ Cash flow from investing activities: ​ ​ Purchase of property and equipment ​ ( 71,510 ) ​ ( 47,209 ) Payment for acquisition of Resolute, net of cash acquired ​ ​ ( 2,718,253 ) ​ ​ — Payment for acquisition of Scite, net of cash acquired ​ ​ ( 7,305,493 ) ​ ​ — Payment for non-refundable deposit for asset acquisition ​ ​ — ​ ​ ( 297,450 ) Net cash used in investing activities ​ ( 10,095,256 ) ​ ( 344,659 ) ​ ​ ​ Cash flow from financing activities: ​ ​ Proceeds from the exercise of stock options ​ ​ — ​ ​ 57,500 Common stock repurchase ​ ​ ( 554,202 ) ​ ​ ( 104,250 ) Payment of contingent acquisition consideration ​ ​ ( 351,649 ) ​ ​ ( 50,509 ) Net cash used in financing activities ​ ( 905,851 ) ​ ( 97,259 ) ​ ​ ​ Effect of exchange rate changes ​ 4,851 ​ 229 Net increase (decrease) in cash and cash equivalents ​ ( 7,445,302 ) ​ 2,942,158 Cash and cash equivalents, beginning of period ​ 13,545,333 ​ 10,603,175 Cash and cash equivalents, end of period ​ $ 6,100,031 ​ $ 13,545,333 ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ Cash paid for income taxes ​ $ 113,071 ​ $ 5,602 ​ ​ ​ Non-cash investing and financing activities: ​ ​ Contingent consideration accrual on asset acquisition ​ $ 32,022 ​ $ 138,428 ​ See notes to consolidated financial statements ​ 40 Table of Contents RESEARCH SOLUTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended June 30, 2024 and 2023 ​ 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 five wholly owned subsidiaries as of June 30, 2024: Reprints Desk, Inc., a Delaware corporation, including its wholly owned subsidiary Resolute Innovation, Inc., a Delaware corporation, Scite, LLC, a Delaware limited liability company, Reprints Desk Latin America S. de R.L. de C.V., an entity organized under the laws of Mexico, and RESSOL LA, S. DE R.L. DE C.V., an entity organized under the laws of Mexico. Nature of Business 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. Individual researchers can sign up under an annual or a month-to-month agreement and are typically billed monthly. Our Platforms also facilitate the sale of published scientific, technical, and medical (“STM”) content sold as individual articles (“Transactions”) either stand alone or via one or more of the research Platform solutions we provide. 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. manage). 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. Platforms 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. 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. 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. 41 Table of Contents 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. 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 efficiencies in scalability, stability and development costs to fuel rapid innovation and to gain a competitive advantage. Transactions 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. 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 and while they typically purchase the articles via one of our Platform solutions, we do have some customers that just order articles from us on behalf of end-users in their organizations. 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. 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 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. 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. 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. ​ ​ 42 Table of Contents 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, 2023 under these requirements. The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended June 30, 2024 ​ Level 1 Level 2 Level 3 Total ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ — ​ $ — ​ $ — $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contingent earnout liability ​ $ — ​ ​ — ​ $ 12,298,114 ​ $ 12,298,114 Total liabilities ​ $ — ​ $ — ​ $ 12,298,114 $ 12,298,114 ​ Our contingent earnout liability related to acquisitions, which are further discussed in Note 9 to the consolidated financial statements, are in the “Level 3” category for valuation purposes. 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. 43 Table of Contents Allowance for Credit Losses The Company’s trade accounts receivable are recorded at amounts billed to customers and presented on the balance sheet net of the allowance for estimated credit losses. 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 past due trade accounts receivable outstanding. The Company established an allowance for doubtful accounts of $ 68,579 and $ 85,015 as of June 30, 2024 and 2023, 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 and British Pounds with an aggregate US Dollar equivalent of $ 294,145 and $ 1,760,323 at June 30, 2024 and 2023, 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, 2024 and 2023. The Company has no customers that represent 10% of accounts receivable at June 30, 2024 and 2023. The following table summarizes our content costs from our vendors: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, ​ ​ 2024 2023 ​ Vendor A ​ 26 % ​ 23 % Vendor B ​ 10 % ​ 13 % ​ 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, 2024 and 2023, the Company did not recognize any impairments for its property and equipment. 44 Table of Contents 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 services to customers at the amount expected to be collected. 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 (“Platform” and “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. 45 Table of Contents Revenue by Geographical Region The following table summarizes revenue by geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ June 30, ​ ​ ​ 2024 ​ 2023 ​ United States ​ $ 26,481,085 59.3 % ​ $ 21,862,582 ​ 58.0 % Europe ​ 13,962,285 31.3 % ​ 12,716,650 33.7 % Rest of World ​ 4,180,529 9.4 % ​ 3,124,220 8.3 % Total ​ $ 44,623,899 100 % ​ $ 37,703,452 100 % ​ Accounts Receivable by Geographical Region The following table summarizes accounts receivable by geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ June 30, ​ ​ 2024 ​ 2023 ​ United States $ 4,125,696 60.0 % ​ $ 3,727,977 ​ 60.6 % Europe ​ 2,082,900 30.2 % ​ 1,763,044 28.6 % Rest of World ​ 671,204 9.8 % ​ 662,042 10.8 % Total ​ $ 6,879,800 100 % ​ $ 6,153,063 100 % ​ Deferred Revenue Contract liabilities, such as deferred revenue, exist where the Company has the obligation to transfer services to a customer for which the entity has received consideration, or when the consideration is due, from the customer. Cash payments received or due in advance of performance are recorded as deferred revenue. Deferred revenue is primarily comprised of cloud-based software subscriptions which are generally billed in advance. The deferred revenue balance is presented as a current liability on the Company's consolidated balance sheets. 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. Segment reporting The Company operates in a single segment based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM. 46 Table of Contents Business Combinations The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and separately identified intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology, and customer relationships, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. Intangible Assets The Company has certain intangible assets that were initially recorded at their fair value at the time of acquisition. The finite-lived intangible assets consist of customer relationships, and developed technology. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful life of three to ten years . The Company reviews all finite-lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations. Goodwill Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of the business acquired. As of June 30, 2024, goodwill that arose from acquisitions of ResoluteAI and Scite (see Note 9) was $ 16,315,888 . Under ASC 350 Intangibles-Goodwill and Other, goodwill and other intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or whenever events or circumstances indicate a potential impairment. The Company’s impairment testing is performed annually at June 30. Impairment of goodwill and indefinite lived intangible assets is determined by comparing the fair value of the Company’s reporting unit to the carrying value of the underlying net assets in the reporting unit. If the fair value of the reporting unit is determined to be less than the carrying value of its net assets, goodwill is deemed impaired and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the fair value of the reporting unit and the fair value of its other assets and liabilities. 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. 47 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 and ResSoL LA 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 loss of $ 21,395 and a gain of $ 121,953 for the years ended June 30, 2024 and 2023, respectively. Cash denominated in Euros and British Pounds with an aggregate US Dollar equivalent of $ 294,145 and $ 1,760,323 at June 30, 2024 and 2023, respectively, was held in accounts at financial institutions located in Europe. The following table summarizes the exchange rates used: ​ ​ ​ ​ ​ ​ ​ Year Ended ​ June 30, ​ 2024 2023 Period end Euro : US Dollar exchange rate ​ 1.07 ​ 1.09 Average period Euro : US Dollar exchange rate ​ 1.08 1.05 ​ ​ ​ ​ ​ Period end GBP : US Dollar exchange rate ​ 1.26 ​ 1.27 Average period GBP : US Dollar exchange rate ​ 1.26 1.20 ​ ​ ​ ​ Period end Mexican Peso : US Dollar exchange rate ​ 0.05 0.06 Average period Mexican Peso : US Dollar exchange rate ​ 0.06 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 stockholders 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, 2024 potentially dilutive securities include options to acquire 2,788,625 shares of common stock and unvested restricted common stock of 1,957,726 . At June 30, 2023 potentially dilutive securities include options to acquire 2,909,574 shares of common stock and unvested restricted common stock of 2,477,794 . 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 year ended June 30, 2024 because all stock options, warrants, and unvested restricted common stock are anti-dilutive. For the year ended June 30, 2023, the calculation of diluted earnings per share include unvested restricted common stock, stock options and warrants, calculated under the treasury stock method. 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 48 Table of Contents 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. Recently Issued Accounting Pronouncements In March 2023, FASB issued ASU 2024-01 to amend the guidance in ASC 718 Compensation—Stock Compensation (Topic 718). Some entities compensate employees or other service providers by granting profits interest awards, which generally give the grantee an opportunity to participate in future profits and/or equity appreciation of the entity but do not give them rights to existing net assets of the entity. ASU 2024-01 adds an example showing how to apply the scope guidance in ASC 718 to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements. The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company does not currently anticipate that the guidance will have a material impact on its financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. This standard will be effective for the Company on July 1, 2024 and interim periods beginning in fiscal year 2025, with early adoption permitted. The updates required by this standard should be applied retrospectively to all periods presented in the financial statements. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows. ​ Note 3. Property and Equipment Property and equipment consists of the following as of June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2024 ​ 2023 Computer equipment ​ $ 687,307 ​ $ 628,200 Software ​ 282,080 ​ 282,080 Furniture and fixtures ​ 41,182 ​ 41,821 Total ​ 1,010,569 ​ 952,101 Less accumulated depreciation ​ ( 922,558 ) ​ ( 881,908 ) Net, Property and equipment ​ $ 88,011 ​ $ 70,193 ​ Depreciation expense for the years ended June 30, 2024 and 2023 was $ 48,316 and $ 28,329 , respectively. ​ Note 4. Intangible Assets ​ Intangible assets consist of developed technology and customer relationships acquired in the acquisition of ResoluteAI effective July 28, 2023 and Scite effective December 1, 2023, and are stated at cost less accumulated amortization. The developed technology and customer relationships are being amortized over the estimated average useful lives of 3 to 10 years . The Company does not have any intangible assets deemed to have indefinite lives. Amortization expense for the years ended June 30, 2024 and 2023 was $ 787,955 and $ 24,320 , respectively. Amortization expense expected to be recognized is approximately $ 1,170,000 annually in 2025 through 2029 and approximately $ 4,930,000 thereafter. ​ 49 Table of Contents Intangible assets consist of the following as of June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2024 ​ 2023 Developed technology ​ $ 10,800,000 ​ $ — Customer relationships ​ ​ 170,000 ​ ​ — Customer lists ​ 1,313,146 ​ 1,192,998 Intellectual property licenses ​ ​ 16,425 ​ ​ 16,425 Total ​ ​ 12,299,571 ​ ​ 1,209,423 Less accumulated amortization ​ ​ ( 1,535,310 ) ​ ​ ( 747,355 ) Net, Intangible assets $ 10,764,261 $ 462,068 ​ ​ ​ Note 5 . Line of Credit On April 15, 2024, the Company entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender. Pursuant to the PNC Loan Agreement, the Company 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, 2025 and bears interest annually at the daily SOFR rate plus 2.5 %, with accrued interest due and payable monthly. The PNC Note contains customary events of default including, among other things, payment defaults, material misrepresentations, breaches of covenants, revocation of guarantee, certain bankruptcy and insolvency events. There were no outstanding borrowings under the line of credit as of June 30, 2024. 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 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. ​ ​ 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. 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 . On November 17, 2021, 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 3,374,513 to 6,874,513 . 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. As of June 30, 2024, there were 1,037,993 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. 50 Table of Contents 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, 2022 3,182,872 $ 1.79 2,999,974 $ 1.75 182,898 $ 2.49 Granted 200,000 ​ 2.15 — ​ — 200,000 ​ 2.15 Options vesting — ​ — 336,834 ​ 2.28 ( 336,834 ) ​ 2.28 Exercised ( 307,298 ) ​ 1.31 ( 307,298 ) ​ 1.31 — ​ — Forfeited ​ ( 166,000 ) ​ 1.81 ( 163,917 ) ​ 1.79 ( 2,083 ) ​ 3.92 Outstanding at June 30, 2023 2,909,574 $ 1.87 2,865,593 $ 1.86 43,981 $ 2.47 Granted 257,934 ​ 2.73 — ​ — 257,934 ​ 2.73 Options vesting — ​ — 42,729 ​ 2.47 ( 42,729 ) ​ 2.47 Exercised ( 373,883 ) ​ 1.99 ( 373,883 ) ​ 1.99 — ​ — Forfeited ( 5,000 ) ​ 2.67 ( 4,583 ) ​ 2.67 ( 417 ) ​ 2.67 Outstanding at June 30, 2024 2,788,625 ​ $ 1.93 2,529,856 ​ $ 1.85 258,769 ​ $ 2.73 ​ 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, 2024 and 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ ​ ​ 2024 2023 ​ Expected dividend yield ​ — % — % Risk-free interest rate ​ 4.00 % 3.76 % Expected life (in years) ​ 5 5 ​ Expected volatility ​ 50 % 56 % ​ The weighted average remaining contractual life of all options outstanding as of June 30, 2024 was 5.08 years. The remaining contractual life for options vested and exercisable at June 30, 2024 was 4.63 years. Furthermore, the aggregate intrinsic value of options outstanding as of June 30, 2024 was $ 1,920,882 , and the aggregate intrinsic value of options vested and exercisable as of June 30, 2024 was $ 1,920,582 , in each case based on the fair value of the Company’s common stock on June 30, 2024. During the year ended June 30, 2024, the Company granted 257,934 options to directors with a fair value of $ 340,473 which amount will be amortized over the vesting period. The total fair value of options that vested during the year ended June 30, 2024 was $ 140,150 and was included in selling, general and administrative expenses in the accompanying statement of operations. As of June 30, 2024, the amount of unvested compensation related to the unvested options was $ 256,321 which will be recorded as an expense in future periods as the options vest. During the year ended June 30, 2024, the Company issued 72,234 net shares of common stock upon the exercise of options underlying 373,883 shares of common stock. During the year ended June 30, 2023, the Company granted 200,000 options to directors with a fair value of $ 222,000 which, due to immediate vesting, were fully expensed at the time of grant. The total fair value of options that vested during the year ended June 30, 2023 was $ 375,189 and was included in selling, general and administrative expenses in the accompanying statement of operations. As of June 30, 2023, the amount of unvested compensation related to the unvested options was $ 56,577 which will be recorded as an expense in future periods as the options vest. During the year 51 Table of Contents ended June 30, 2023, the Company issued 137,523 net shares of common stock upon the exercise of options underlying 307,298 shares of common stock, resulting in net cash proceeds of $ 57,500 . ​ Additional information regarding stock options outstanding and exercisable as of June 30, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Option ​ Remaining ​ ​ Exercise ​ Options ​ Contractual ​ Options ​ Price ​ Outstanding ​ Life (in years) ​ Exercisable $ 0.70 225,000 1.43 225,000 ​ 0.77 25,000 0.13 25,000 ​ 0.80 16,000 1.14 16,000 ​ 0.90 15,000 1.10 15,000 ​ 1.00 15,000 0.69 15,000 ​ 1.05 305,000 2.15 305,000 ​ 1.09 40,000 1.90 40,000 ​ 1.10 105,000 1.00 105,000 ​ 1.20 247,000 3.39 247,000 ​ 1.59 25,000 3.86 25,000 ​ 2.10 ​ 238,767 ​ 7.61 ​ 238,767 ​ 2.13 ​ 216,708 ​ 6.39 ​ 216,708 ​ 2.15 ​ 200,000 ​ 8.45 ​ 200,000 ​ 2.17 ​ 35,955 ​ 6.87 ​ 35,955 ​ 2.19 ​ 5,000 ​ 7.56 ​ 4,165 ​ 2.40 284,000 4.38 284,000 ​ 2.43 ​ 61,250 ​ 6.93 ​ 61,250 ​ 2.45 ​ 89,500 ​ 6.10 ​ 89,500 ​ 2.49 ​ 78,435 ​ 5.92 ​ 78,435 ​ 2.50 ​ 20,000 ​ 4.88 ​ 20,000 ​ 2.64 ​ 30,882 ​ 7.10 ​ 30,882 ​ 2.67 ​ 28,194 ​ 7.22 ​ 28,194 ​ 2.73 ​ 257,934 ​ 9.44 ​ — ​ 2.99 ​ 8,000 ​ 5.87 ​ 8,000 ​ 3.13 ​ 208,000 ​ 5.37 ​ 208,000 ​ 3.50 ​ 8,000 ​ 5.62 ​ 8,000 ​ Total ​ 2,788,625 ​ ​ ​ 2,529,856 ​ ​ Restricted Common Stock Prior to July 1, 2022, the Company issued 2,829,758 shares of restricted common stock to employees valued at $ 3,836,194 , of which $ 3,060,741 had been recognized as an expense. As of June 30, 2022, 400,092 of these shares with a grant date fair value of $ 775,453 had not yet vested. During the year ended June 30, 2023, the Company issued an additional 2,354,834 shares of restricted stock to employees with an aggregate fair value of $ 3,478,878 . Of this amount, 229,834 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 and 25,000 shares vest over a four 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 these stock awards was $ 503,478 based on the market price of our common stock price ranging from $ 1.94 to $ 2.22 per share on the date of grant, which will be amortized over the range of three and four-year vesting periods. The remaining 2,100,000 shares were granted, under the 2017 Plan, as restricted stock awards to key management in accordance with its long-term equity bonus program (the “LTEBP”). During the year ended June 30, 2024, the Company issued an additional 405,000 shares of restricted stock to employees with an aggregate fair value of $ 925,900 . Of this amount, 155,000 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 52 Table of Contents of these stock awards was $ 417,700 based on the market price of our common stock ranging from $ 2.24 to $ 2.73 per share on the date of grant, which will be amortized over the range of a three-year vesting period. The remaining 250,000 shares were granted, under the 2017 Plan, as restricted stock awards to key management in accordance with the LTEBP. The LTEBP replaced the previous restricted stock compensation program for executives. It spans 5 years and is designed to better serve stockholder interests by aligning key executive compensation with stockholder value. Awards under the LTEBP will vest as follows, upon the 30-day volume weighted average price (VWAP) of our common stock reaching the following targets: ​ • 20 % at a 30-day VWAP of $ 3.00 per share; • 20 % at a 30-day VWAP of $ 3.75 per share; • 20 % at a 30-day VWAP of $ 4.50 per share; • 20 % at a 30-day VWAP of $ 5.25 per share; and • 20 % at a 30-day VWAP of $ 6.00 per share. ​ Upon a change of control vesting will accelerate with respect to that portion of the award that would vest if the target 30-day VWAP was achieved at the level above the per share price in such change of control transaction. For example, if we granted an award of 100,000 shares under the LTEBP, 20,000 shares would vest upon our stock price achieving a 30-day VWAP of $ 3.00 per share, and 20,000 shares would vest upon our stock price achieving a 30-day VWAP of $ 3.75 per share. If the per share price in a change of control transaction was $ 5.00 per share, vesting would accelerate for 40,000 shares under the same award (i.e. the number of shares that would vest for our stock price achieving a 30-day VWAP of $ 5.25 per share, pursuant to a tier round up provision in the Plan effective upon a change in control). As a condition to receiving awards under the LTEBP, recipients will be required to hold at least 75 % of all vested shares during the term of their employment. Applicable target 30-day VWAPs must be achieved within 5 years following the grant of awards under the LTEBP, and all unvested awards under the LTEBP will be forfeited upon expiration of such 5-year period. Recipients will also forfeit unvested awards in the event their service with our company terminates for any reason. As the vesting of the 250,000 shares of restricted common stock under the LTEBP is subject to certain market conditions, pursuant to current accounting guidelines, the Company determined the fair value to be $ 508,200 , computed using the Monte Carlo simulations on a binomial model with the assistance of a valuation specialist with a derived service period ranging from 0.68 to 2.51 years. The total fair value of restricted common stock vesting and expenses related to amortization of the fair value of the LTEBP during the year ended June 30, 2024 was $ 1,994,362 and is included in selling, general and administrative expenses in the accompanying statements of operations. As of June 30, 2024, the amount of unvested compensation related to issuances of restricted common stock was $ 1,375,199 , which will be recognized as an expense in future periods as the shares vest. When calculating basic net income 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. When calculating net loss per share, the 1,957,726 shares are considered antidilutive and are excluded from that calculation. 53 Table of Contents The following table summarizes restricted common stock activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ Average ​ ​ Number of ​ ​ ​ ​ Grant Date ​ ​ Shares ​ Fair Value ​ Fair Value Non-vested, June 30, 2022 400,092 ​ ​ 775,453 ​ $ 2.38 Granted 2,354,834 ​ 3,478,878 ​ 1.48 Vested ( 211,967 ) ​ ( 1,418,717 ) ​ 2.42 Forfeited ( 65,165 ) ​ ( 123,953 ) ​ 2.15 Non-vested, June 30, 2023 2,477,794 ​ $ 2,711,661 ​ $ 1.52 Granted 405,000 ​ 925,900 ​ 2.29 Vested ( 725,068 ) ​ ( 1,994,362 ) ​ 1.70 Forfeited ( 200,000 ) ​ ( 268,000 ) ​ 1.40 Non-vested, June 30, 2024 1,957,726 ​ $ 1,375,199 ​ $ 1.63 ​ Common Stock Repurchase and Retirement Effective as of March 19, 2024, the Compensation Committee of our Board of Directors authorized the repurchase, on the last day of each trading window during which the outstanding awards remain outstanding and otherwise in accordance with our insider trading policies, of an aggregate value not exceeding $ 750,000 , in addition to the prior remaining balance of outstanding common stock of $ 82,347 (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 through the end of fiscal year 2025. 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. As of June 30, 2023, $ 151,095 remained under the current authorization to repurchase our outstanding common stock from our employees. During the years ended June 30, 2024 and 2023, the Company repurchased 198,383 and 51,841 shares of our common stock under the repurchase plan at an average price of approximately $ 2.79 and $ 2.01 per share, respectively, for an aggregate amount of $ 554,202 and $ 104,250 , respectively. As of June 30, 2024, $ 346,893 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. 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 ​ per Share ​ Plans or Programs ​ Plans or Programs September 2022 9,659 ​ $ 1.87 — $ 237,283 December 2022 16,141 ​ $ 1.90 — ​ 206,616 March 2023 12,785 ​ $ 2.02 — ​ ​ 180,789 June 2023 13,256 ​ $ 2.24 — ​ ​ 151,095 Year ended June 30, 2023 51,841 ​ $ 2.01 — ​ $ 151,095 ​ ​ ​ ​ ​ September 2023 18,603 ​ $ 2.48 — $ 104,960 December 2023 8,501 ​ $ 2.66 — ​ 82,347 March 2024 159,044 ​ $ 2.85 — ​ ​ 379,071 June 2024 12,235 ​ $ 2.63 — ​ ​ 346,893 Year ended June 30, 2024 198,383 ​ $ 2.79 — ​ $ 346,893 ​ ​ ​ 54 Table of Contents ​ Note 7. Contingencies and Commitments 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. ​ Note 8. Income Taxes The provision for income taxes consists of the following for the years ended June 30, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 30, ​ 2024 2023 Current ​ ​ Federal ​ $ — ​ $ — State ​ 21,143 ​ 3,806 Foreign (Mexico) ​ 91,928 ​ 1,796 Deferred ​ ​ ​ ​ Federal ​ — ​ — Foreign ​ — ​ — State ​ — ​ — Provision for income tax expense ​ $ 113,071 ​ $ 5,602 ​ During the year ended June 30, 2024, the Company recorded a provision for income tax expense of $ 113,071 , which consisted of $ 21,143 in state income tax payments and $ 91,928 in foreign (Mexico) income tax payments. During the year ended June 30, 2023, the Company recorded a provision for income tax expense of $ 5,602 which consisted of $ 3,806 in state income tax payments and $ 1,796 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, ​ ​ 2024 2023 Federal income tax rate 21.0 % 21.0 % State tax, net of federal benefit 1.7 % 5.0 % Permanent differences ( 70.5 ) % ( 3.4 ) % Change in valuation allowance 44.8 % ( 21.8 ) % Effective income tax rate ( 2.9 ) % 0.8 % ​ 55 Table of Contents 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, 2024 and 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, June 30, ​ ​ 2024 ​ 2023 Deferred tax assets: ​ ​ Federal net operating loss carryforward ​ $ 3,512,478 ​ $ 2,074,080 State net operating loss carryforward ​ 531,098 ​ 171,716 Intangibles amortization ​ — ​ 148,404 Stock based compensation ​ 1,440,562 ​ 2,250,149 Other ​ 34,571 ​ 211,219 Total deferred tax assets ​ 5,518,709 ​ 4,855,568 Deferred tax liability: ​ ​ ​ ​ Fixed asset depreciation ​ ( 2,386,241 ) ​ ( 73,224 ) Net deferred tax assets ​ 3,132,468 ​ 4,782,344 Less valuation allowance ​ ( 3,132,468 ) ​ ( 4,782,344 ) ​ ​ $ — ​ $ — ​ The Company has provided a valuation allowance on the deferred tax assets at June 30, 2024 and 2023 to reduce such asset to zero , since there is no assurance that the Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted. The net change in the valuation allowance for the year ended June 30, 2024 was a decrease of $ 1,649,876 . At June 30, 2024 and 2023, the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 16,726,000 and $ 15,650,000 , respectively, and state NOL carryforwards of approximately $ 7,748,000 and $ 6,560,000 , respectively. Federal NOLs generated prior to and after 2018 can be carried forward indefinitely with some limitations. State NOLs will begin to expire in 2026. 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, 2024 and 2023, 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, 2024 and 2023, 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. Acquisition ​ Current Year Business Combinations ResoluteAI On July 28, 2023, the Company acquired 100 % of the outstanding stock of Resolute Innovation, Inc. (“ResoluteAI”), a Delaware corporation, an advanced search platform that equips organizations with search, discovery and knowledge management tools that are powered by artificial intelligence (“AI”) and neuro-linguistic programming (“NLP”) technologies. The total purchase consideration for ResoluteAI, net of cash acquired, was approximately $4.7 million. The 56 Table of Contents consideration included an initial payment of $ 2.8 million, a holdback of $ 0.1 million and a contingent earnout that had an initial fair value of $ 1.8 million. The Company’s revaluation of the earnout resulted in a fair value of $ 0 as of June 30, 2024. The contingent earnout payment will be based upon the product of three and one half multiplied by ending annual recurring revenue as of January 31, 2025 less the agreed upon Enterprise Value of $ 3.4 million. Scite On December 1, 2023, the Company acquired 100 % of the outstanding stock of Scite, Inc. a Delaware corporation (“Scite”), a platform for discovering and evaluating scientific articles via Smart Citations. Smart Citations allow users to see how a publication has been cited by providing the context of the citation and a classification describing whether it allows for supporting or contrasting evidence for the cited claim. The total purchase consideration for Scite, net of cash acquired, was approximately $ 21.1 million. The consideration included an initial payment of $ 7.2 million in cash, $ 6.5 million in stock, a holdback of $ 0.2 million and a contingent earnout that had an initial fair value of $ 7.2 million. The Company’s revaluation of the earnout resulted in a fair value of $ 12.2 million as of June 30, 2024. The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations, and allocated the purchase price to ResoluteAI’s and Scite’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The fair value assigned to the developed technology and customer relationships were determined using the multi-period excess earnings method, which estimates the direct cash flow expected to be generated from the existing customers acquired. The cash flows were based on estimates used to value the acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model, as well as the weighted average cost of capital. The valuation assumptions took into consideration the Company’s estimates of customer attrition and revenue growth projections. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as goodwill. Goodwill also represents the future benefits as a result of the acquisitions that the Company believes will enhance the Company’s product offerings and lineup available to both new and existing customers and generate future synergies within the software and related services business. At the date of the acquisition and as of this Annual Report on Form 10-K, management has not yet finalized its valuation analysis related to Scite acquisition. The fair values of the assets acquired, as set forth below, are considered provisional and subject to adjustment as additional information is obtained through the purchase price measurement period (a period of up to one year from the closing date). Any prospective adjustments through the purchase price measurement period would change the fair value allocation as of the acquisition date. The Company is still in the process of reviewing underlying models, assumptions and discount rates used in the valuation of provisional goodwill and intangible assets. 57 Table of Contents The following table represents the Company’s allocation of the total purchase consideration to the fair value of tangible assets, identifiable intangible assets, and assumed liabilities of ResoluteAI and Scite on the date of acquisition: ​ ​ ​ ​ ​ ​ ​ ​ In thousands ResoluteAI Scite Fair value of consideration ​ ​ ​ ​ ​ ​ Cash ​ $ 2,774 ​ $ 7,217 Holdback cash paid ​ 125 ​ 175 Common Stock ( 2,729,014 shares at $ 2.40 per share) ​ — ​ 6,549 Contingent earn-out ​ ​ 1,867 ​ ​ 7,194 Total purchase price ​ 4,766 ​ 21,135 ​ ​ ​ ​ ​ ​ ​ Allocation of the consideration to the fair value of assets acquired and liabilities assumed: ​ ​ ​ ​ ​ Cash and cash equivalents ​ 59 ​ — Accounts receivable ​ 162 ​ 109 Prepaid expenses ​ 43 ​ — Accounts payable and accrued expenses ​ ( 33 ) ​ — Deferred revenue ​ ​ ( 649 ) ​ ​ ( 997 ) Other current liabilities ​ ​ ( 60 ) ​ ​ ( 18 ) Net tangible assets ​ ​ ( 478 ) ​ ​ ( 906 ) ​ ​ ​ ​ ​ ​ ​ Intangible assets: ​ ​ ​ ​ ​ ​ Developed technology ​ ​ 2,000 ​ ​ 8,800 Customer relationships ​ ​ 100 ​ ​ 70 Net identifiable intangible assets ​ ​ 2,100 ​ ​ 8,870 ​ ​ ​ ​ ​ ​ ​ Goodwill ​ ​ 3,144 ​ ​ 13,171 ​ ​ ​ ​ ​ ​ ​ Fair value of net assets acquired ​ $ 4,766 ​ $ 21,135 ​ Prior Year Asset Acquisition ​ FIZ On September 28, 2022, Reprints Desk entered into an asset purchase agreement with FIZ Karlsruhe – Leibniz-Institut für Informationsinfrastruktur GmbH (“FIZ”). FIZ delivers STM content pursuant to various contracts with its customers through its AutoDoc platform. FIZ agreed to assign and transfer to Reprints Desk certain of these contracts effective January 1, 2023 (the “Sold Contracts”). ​ On September 30, 2022, Reprints Desk made a non-refundable payment of $ 297,450 (€ 300,000 ) (the “Base Amount”) as initial consideration for the asset purchase. As of June 30, 2024, Reprints Desk has paid $ 64,578 in contingent consideration for customers that have their Sold Contracts assumed by Reprints Desk in comparison to the trailing twelve months of revenue of all Sold Contracts (the “Base Amount Plus”). As of June 30, 2024, $ 161,976 in contingent consideration was recorded for customers that placed an order and have consented to have their contract assumed by Reprints Desk (the “Bonus Amount”). As of June 30, 2024, $ 96,121 and $ 116,364 of Bonus Amount payments were made for the 2023 fiscal year and 2024 fiscal year, respectively. The Bonus Amount is based upon the collectable service fee that FIZ would have received from these customers. Contingent consideration for the Bonus Amount will continue to be paid in arrears through the quarter ending December 31, 2025. ​ The current contingent consideration for the Base Amount Plus and the Bonus Amount is recorded as a short-term liability on the balance sheet. At June 30, 2024, the Base Amount, the Base Amount Plus and the Bonus Amount were recorded as intangible assets on the balance sheet with an estimated average useful life of 10 years . ​ 58 Table of Contents The following sets out the unaudited pro forma operating results for the year ended June 30, 2024 and 2023 for the Company had the acquisitions occurred as of July 1, 2022. These amounts include amortization of intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pro Forma (Unaudited) ​ ​ Year ended June 30, ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 46,083,535 ​ $ 38,824,651 Cost of revenue ​ 25,091,938 ​ 23,202,113 Gross profit ​ 20,991,597 ​ 15,622,538 ​ ​ ​ Total operating expenses ​ 21,572,819 ​ 15,851,599 ​ ​ ​ ​ ​ ​ ​ Loss from operations ​ ( 581,222 ) ​ ( 229,061 ) ​ ​ ​ Other income (expense) ​ ( 2,902,981 ) ​ 338,617 ​ ​ ​ Income (loss) from operations before provision for income taxes ​ ( 3,484,203 ) ​ 109,556 Provision for income taxes ​ ( 113,071 ) ​ ( 5,602 ) ​ ​ ​ Pro Forma Net income (loss) ​ $ ( 3,597,274 ) ​ $ 103,954 Pro Forma Net income (loss) per weighted average share, basic ​ $ ( 0.12 ) ​ $ — Pro Forma Net income (loss) per weighted average share, diluted ​ $ ( 0.12 ) ​ $ — ​ ​ ​ Note 10. Subsequent Events Stock Options ​ On August 6, 2024, the Company issued 250,000 shares of restricted common stock under the long-term equity bonus plan, or LTEBP. On August 9, 2024, the Company issued 7,105 shares of common stock upon the exercise of stock options underlying 10,000 shares of common stock on a cashless basis. On August 13, 2024, the Company issued 10,674 shares of common stock upon the exercise of stock options underlying 15,000 shares of common stock on a cashless basis. ​ ​ 59 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. ​