Research Solutions Inc
For the period ended Mar 31, 2024. Filed May 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 13, 2024
RSSS$1.820.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-12.
0001558370-24-000977
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001558370-24-007952
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 68 current paragraphs.
43 unchanged; 22 reworded; 1 added; 4 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 39 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
On April 15, 2024, we entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender. Pursuant to the PNC Loan Agreement, we entered into a Revolving Line of Credit Note (the “PNC Note”) with PNC, which provides for a $500,000 secured revolving line of credit that matures on April 15, 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 May 13, 2024.
Removed paragraphs (4)
Previous report
There were no outstanding borrowings under the line as of December 31, 2023 and June 30, 2023, respectively. As of December 31, 2023, there was approximately $2,426,000 of available credit. On March 27, 2023, First Citizens BancShares, Inc. (“FCB”) entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) to purchase all of the assets and liabilities of SVB. We have confirmed that the Loan and Security Agreement remains in effect post this transaction and that, we continue to have access to the revolving line of credit.
Previous report
SVB Bridge Bank agreed that we can lower our cash balance threshold requirement associated with the SVB LSA, reducing the required balances of its and its subsidiaries’ primary operating and other accounts with SVB, and we continue to evaluate the SVB LSA. We have established additional banking relationships with Bank of America, N.A. and PNC Bank, N.A. At December 31, 2023, we held cash at Bank of America, N.A. of $124,044 and at PNC Bank, N.A. of $136,730.
Previous report
Subsequent to September 30, 2023, FCB informed us of certain defaults under the SVB LSA resulting from our violation of certain covenants regarding retaining operating cash with SVB, obtaining deposit account control agreements with respect to such accounts and failing to maintain the required adjusted quick ratio. We became aware of additional technical defaults following FCB’s outreach, and such defaults substantially related to our moves to promptly diversify its cash position following the collapse of Silicon Valley Bank in March of 2023. On November 14, 2023, we entered into a
Previous report
Fifth Amendment to Amended and Restated Loan and Security Agreement, Consent and Forbearance Agreement (the “Fifth Amendment”) with FCB, pursuant to which, among other matters, FCB agreed to forbear from exercising its remedies under the SVB LSA in connection with the existing events of default, and agreed to waive the existing events of default provided we regain compliance with the adjusted quick ratio covenant and the operating accounts covenants by January 30, 2024, no other events of defaults have occurred and no forbearance termination events (as listed in the Fifth Amendment) have occurred.
Reworded paragraphs (22)
Previous wording
The following discussion and analysis of our financial condition and results of operations for the three and six months ended December 31, 2023 and 2022 should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
Current wording
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended March 31, 2024 and 2023 should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
Previous wording
We do not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy. However, there is a risk that our operating costs could become subject to inflationary and interest rate
Current wording
We do not believe that inflation has had a material effect on its operations to date, other than its impact on the general economy. However, there is a risk that our operating costs could become subject to inflationary and interest rate pressures in the future, which would have the effect of increasing our operating costs, and which would put additional stress on our working capital resources.
Previous wording
We charge a subscription fee that allows customers to access and utilize certain premium features of our Platforms. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.
Current wording
We charge a subscription fee that allows customers to access and utilize certain premium features of our Platforms. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided
Previous wording
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.
Current wording
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. All articles are in PDF format and delivered to customers via various electronic methods. Each of these delivery methods is trackable, with ability to monitor such things as the date and time when the link was e-mailed and the time and IP address used to download the article.
Previous wording
Comparison of the Three and Six Months Ended December 31, 2023 and 2022
Current wording
Comparison of the Three and Nine Months Ended March 31, 2024 and 2023
Previous wording
Total revenue increased $1,597,076, or 18.3%, for the three months ended December 31, 2023 compared to the prior year, due to the following:
Current wording
Total revenue increased $1,773,246, or 17.1%, for the three months ended March 31, 2024 compared to the prior year, due to the following:
Previous wording
Total revenue increased $2,973,404, or 17.1%, for the six months ended December 31, 2023 compared to the prior year, due to the following:
Current wording
Total revenue increased $4,746,650, or 17.1%, for the nine months ended March 31, 2024 compared to the prior year, due to the following:
Previous wording
Total cost of revenue as a percentage of revenue decreased 4.5%, from 61% for the previous year to 56.5%, for the three months ended December 31, 2023.
Current wording
Total cost of revenue as a percentage of revenue decreased 6.3%, from 61.1% for the previous year to 54.8%, for the three months ended March 31, 2024.
Previous wording
Total cost of revenue as a percentage of revenue decreased 3%, from 61.2% for the previous year to 58.2%, for the six months ended December 31, 2023.
Current wording
Total cost of revenue as a percentage of revenue decreased 4.2%, from 61.1% for the previous year to 56.9%, for the nine months ended March 31, 2024.
Previous wording
Net loss decreased $255,530 or 79%, for the three months ended December 31, 2023 compared to the prior year, primarily due to gross profit, partially offset by increased operating expenses as described above.
Current wording
Net income decreased $160,541 or 67.8%, for the three months ended March 31, 2024 compared to the prior year, primarily due to increased operating expenses, partially offset by gross profit as described above.
Previous wording
Net loss increased $1,000,706 or 2,442%, for the six months ended December 31, 2023 compared to the prior year, primarily due to increased operating expenses, partially offset by increased gross profit as described above.
Current wording
Net loss increased $1,161,247 or 592.8%, for the nine months ended March 31, 2024 compared to the prior year, primarily due to increased operating expenses, partially offset by increased gross profit as described above.
Previous wording
As of December 31, 2023, we had cash and cash equivalents of $2,697,659, compared to $13,545,333 as of June 30, 2023, a decrease of $10,847,674. This decrease was primarily due to cash used in investing activities.
Current wording
As of March 31, 2024, we had cash and cash equivalents of $4,221,424, compared to $13,545,333 as of June 30, 2023, a decrease of $9,323,909. This decrease was primarily due to cash used in investing activities.
Previous wording
Net cash used in operating activities was $426,888 for the six months ended December 31, 2023 and resulted primarily from an increase in accounts receivable of $681,502 and an increase in deferred revenue of $241,545, partially offset by a decrease in prepaid royalties of $121,100.
Current wording
Net cash provided by operating activities was $1,589,791 for the nine months ended March 31, 2024 and resulted primarily from an increase in fair value of vested restricted common stock of $1,603,820, an increase in deferred revenue of $768,347, partially offset by an increase in accounts receivable of $739,883.
Previous wording
Net cash provided by operating activities was $1,023,585 for the six months ended December 31, 2022 and resulted primarily from a decrease in prepaid royalties of $805,436, an increase in fair value of vested restricted common stock of $482,327 and an increase in deferred revenue of $428,999, partially offset by a decrease in accounts payable and accrued expenses of $974,931.
Current wording
Net cash provided by operating activities was $1,872,356 for the nine months ended March 31, 2023 and resulted primarily from an increase in deferred revenue of $986,044, an increase in accounts payable and accrued expenses of $947,789 and an increase in fair value of vested restricted common stock of $925,550, partially offset by an increase in accounts receivable of $1,545,695.
Previous wording
Net cash used in investing activities was $10,079,509 for the six months ended December 31, 2023 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 $10,081,507 for the nine months ended March 31, 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.
Previous wording
Net cash used in investing activities was $316,326 for the six months ended December 31, 2022 and resulted primarily from the payment for non-refundable deposit for asset acquisition of $297,450.
Current wording
Net cash used in investing activities was $327,426 for the nine months ended March 31, 2023 and resulted primarily from the payment for non-refundable deposit for asset acquisition of $297,450.
Previous wording
Net cash used in financing activities was $346,943 for the six months ended December 31, 2023 and resulted from the payment of contingent acquisition consideration of $278,195 and the repurchase of common stock of $68,748.
Current wording
Net cash used in financing activities was $836,984 for the nine months ended March 31, 2024 and resulted from repurchase of common stock of $522,024 and the payment of contingent acquisition consideration of $314,960.
Previous wording
Net cash used in financing activities was $48,729 for the six months ended December 31, 2022 and resulted from the repurchase of common stock of $48,729.
Current wording
Net cash used in financing activities was $17,056 for the nine months ended March 31, 2023 and resulted from the repurchase of common stock of $74,556, partially offset by the proceeds from the exercise of options of $57,500.
Previous wording
We entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which, as amended, provides for a revolving line of credit for the lesser of $2,500,000, or 80% of eligible accounts receivable. The line of credit matures on February 28, 2024, and is subject to certain financial and performance covenants with which we were in compliance as of December 31, 2023. Financial covenants include maintaining an adjusted quick ratio of unrestricted cash and net accounts receivable, divided by current liabilities plus debt less deferred revenue of at least 1.15 to 1.0. The line of credit bears interest at an annual rate equal to the greater of 1% above the prime rate and 5.0%. The interest rate on the line of credit was 9.5% as of December 31, 2023. The line of credit was secured by our consolidated assets.
Current wording
We entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) on July 23, 2010, which, as amended, provides for a revolving line of credit for the lesser of $2,500,000, or 80% of eligible accounts receivable. The line of credit matured on February 28, 2024 and was not renewed. There were no outstanding borrowings on the line of credit at maturity and all security interests and liens related to the Loan and Security Agreement have been released.
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, income from operations or any other performance measure derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of liquidity. We define Adjusted EBITDA as net income (loss), plus interest expense, other income (expense), foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, income from discontinued operations and gain on sale of discontinued operations. 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 (loss), plus interest expense, other income (expense), foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, income from discontinued operations and gain on sale of discontinued operations. 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
Previous wording
Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the three and six months ended December 31, 2023 and 2022:
Current wording
Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the three and nine months ended March 31, 2024 and 2023:
Previous wording
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; and in making compensation
Current wording
We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; and in making compensation decisions and in communications with our board of directors concerning our financial performance. Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following:
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
pressures in the future, which would have the effect of increasing our operating costs, and which would put additional stress on our working capital resources.
Previous report — wording carried elsewhere
decisions and in communications with our board of directors concerning our financial performance. Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following: