Research Solutions, Inc.

Previous wording

AI models are integral to powering the unique insights our platforms provide as well as the user experience customers enjoy. Natural language processing (“NLP”) and AI models are used to enhance metadata, define connections between topics and content items as well as to generate data and metrics employed to enable users to rapidly identify and understand the value of content they need for their research. We also use state of the art AI models, such as Large Language Models to include Generative AI “assistants” in several parts of the research workflow today and will continually add capability as we move forward. Today we employ Generative AI technologies as a basis for our recommendation engine in our Discovery Tools, Access, and Manage Platform solutions. In addition, Generative AI based “assistants” in some of our solutions allow the researcher to ask questions about articles, groups of articles (folders), and more. We also have the capability to provide near full text search on STM content in the Scite.ai solution where the publisher gives us the rights to do so. The ability to not only mine an article’s full text but also show snippets of full text is unique to our Company and allows our Generative AI assistants to provide highly accurate results with a very low incidence of hallucinations as part of a Retrieval Augmented Generation framework focused just on STM content. We plan to release several new Platform solutions to enhance the research workflows described above and add new solutions to support the analysis functions that exist in our typical customer base.

Current wording

AI models are integral to powering the unique insights our platforms provide as well as the user experience customers enjoy. Natural language processing (“NLP”) and AI models are used to enhance metadata, define connections between topics and content items as well as to generate data and metrics employed to enable users to rapidly identify and understand the value of content they need for their research. We also use state of the art AI models, such as large language models (“LLMs”) to include generative AI “assistants” in several parts of the research workflow today and will continually add capability as we move forward. Today we employ generative AI technologies as a basis for our recommendation engine in our Discovery Tools, Access, and Manage Platform solutions. In addition, generative AI based “assistants” in some of our solutions allow the researcher to ask questions about articles, groups of articles (folders), and more. We also have the capability to provide near full text search on STM content in the Scite.ai solution where the publisher gives us the rights to do so. The ability to not only mine an article’s full text but also show snippets of full text is unique to our Company and allows our generative AI assistants to provide highly accurate results with a very low incidence of hallucinations as part of a retrieval augmented generation framework focused just on STM content. We intend to continue investing in our platforms and in our integrations with third-party AI applications, through new product enhancements and expanded dataset coverage.

Previous wording

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties.

Current wording

The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our consolidated financial statements because they inherently involve significant judgments and uncertainties.

Previous wording

We account 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.

Current wording

We account for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“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.

Previous wording

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We derive our revenues from two sources: annual licenses that allow customers to access and utilize certain premium features of our

Current wording

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. We derive our

Previous wording

cloud-based SaaS research intelligence platforms and the transactional sale of STM content managed, sourced and delivered through the Platform.

Current wording

revenues from two sources: annual licenses that allow customers to access and utilize certain premium features of our cloud-based SaaS research intelligence platforms and the transactional sale of STM content managed, sourced and delivered through the Platform.

Previous wording

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 estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing model. Depending on the type of restricted stock award, the fair value of our restricted stock is estimated based on the market price of our common stock on the date of grant or with the assistance of a valuation specialist, using the Monte Carlo simulations on a binomial model with a derived service period. We recognize compensation expense on the straight-line basis over the requisite service period for awards subject to time vesting conditions and the graded tranche basis for awards subject to market vesting conditions. Forfeitures are accounted for as they occur. We recognize stock-based compensation within the consolidated statements of operations and comprehensive income (loss) with classification depending on the nature of the services rendered.

Current wording

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 Financial Accounting Standards Board (“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. Depending on the type of restricted stock award, the fair value of our restricted stock is estimated based on the market price of our common stock on the date of grant or with the assistance of a valuation specialist, using the Monte Carlo simulations on a binomial model with a derived service period. We recognize compensation expense on the straight-line basis over the requisite service period for awards subject to time vesting conditions and the graded tranche basis for awards subject to market vesting conditions. Forfeitures are accounted for as

Previous wording

Our trade accounts receivable are recorded at amounts billed to customers and presented on the consolidated balance sheet net of the allowance for estimated credit losses, and typically due within 30 days. We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations to us, we estimate and record a specific reserve for bad debts, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses, our forecast and an overall assessment of trade accounts receivable outstanding. We established an allowance for doubtful accounts of $182,324 and $68,579 as of June 30, 2025 and 2024, respectively. We added provisions and reserve adjustments of approximately $163,000 and $99,000 in the years ended June 30, 2025 and 2024, respectively. We had write-offs of approximately $49,000 and $80,000 in the years ended June 30, 2025 and 2024, respectively.

Current wording

Our trade accounts receivable are recorded at amounts billed to customers and presented on the consolidated balance sheets net of the allowance for estimated credit losses, and typically due within 30 days. We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations to us, we estimate and record a specific reserve for bad debts, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses, our forecast and an overall assessment of trade accounts receivable outstanding. We established an allowance for doubtful accounts of $103,217 and $182,324 as of June 30, 2026 and 2025, respectively. We recorded a credit to bad debt expense of approximately $23,000 in the year ended June 30, 2026 and a bad debt expense of approximately $141,000 in the year ended June 30, 2025. We had write-offs of approximately $56,000 and $49,000 in the years ended June 30, 2026 and 2025, respectively, which reduced our allowance for doubtful accounts.

Previous wording

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

Current wording

Total revenue decreased $751,024 or 1.5%, for the year ended June 30, 2026 compared to the prior year, due to the following:

Previous wording

Total cost of revenue as a percentage of revenue decreased 5.3%, from 56.0% for the previous year to 50.7%, for the year ended June 30, 2025.

Current wording

Total cost of revenue as a percentage of revenue decreased 2.6%, from 50.7% for the previous year to 48.1%, for the year ended June 30, 2026.

Previous wording

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

Current wording

During the years ended June 30, 2026 and 2025, we recorded a provision for income taxes of $133,042 and $82,811, respectively, an increase of $50,231, which was largely due to an increase in state income taxes.

Previous wording

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

Current wording

Net income increased $1,556,515, or 123%, for the year ended June 30, 2026 compared to the prior year, primarily due to a fiscal year 2025 increase in the estimated fair value related to the Scite earn out liability resulting in higher expense recognized during that fiscal year as well as increased gross margin and decreased operating expenses recognized in fiscal year 2026 as described above.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $12,227,312 compared to $6,100,031 as of June 30, 2024, an increase of $6,127,281. This increase was primarily due to cash provided by operating activities.

Current wording

As of June 30, 2026, we had cash and cash equivalents of $12,630,283 compared to $12,227,312 as of June 30, 2025, an increase of $402,971. This increase was primarily due to cash provided by operating activities partially offset by cash used in financing activities.

Previous wording

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

Current wording

Net cash provided by operating activities was $5,274,420 for the year ended June 30, 2026 and resulted primarily from net income of $2,822,068, accreted interest expense of $1,040,293 and an increase in deferred revenue of $782,957, partially offset by a decrease in accounts payable and accrued expenses of $1,262,918.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

Net cash used in investing activities was $39,771 for the year ended June 30, 2026 and resulted from the purchase of property and equipment.

Previous wording

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

Current wording

Net cash used in financing activities was $4,845,747 for the year ended June 30, 2026 and resulted from the payment of contingent acquisition consideration of $4,950,208 and the repurchase of common stock of $53,039, partially offset by the proceeds from the exercise of stock options of $157,500.

Previous wording

In addition to our GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income (loss), income (loss) from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income (loss), plus interest expense, other (income) expense including any change in fair value of contingent earnout liability, foreign currency transaction loss (gain), provision for income taxes, depreciation and amortization, and stock-based compensation, when applicable. Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Current wording

In addition to our GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income, plus interest expense, other (income) expense including accreted interest expense and change in fair value of contingent earnout liability, foreign currency transaction loss (gain), provision for income taxes, depreciation and amortization, and stock-based compensation, when applicable. Management considers our core operating performance to be that which our managers can affect in any particular period through their management of the resources that affect our underlying revenue and profit generating operations that period. Non-GAAP adjustments to our results prepared in accordance with GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Previous wording

Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the year ended June 30, 2025 and 2024:

Current wording

Set forth below is a reconciliation of Adjusted EBITDA to net income for the year ended June 30, 2026 and 2025: