Form 8-K - Current report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report:

(Date of earliest event reported)

May 9, 2024

Research Solutions, Inc.

(Exact name of registrant as specified in its charter)

Nevada

(State or other Jurisdiction of Incorporation)

1-39256		11-3797644
(Commission File Number)		(IRS Employer Identification No.)

N/A

(Address of Principal Executive Offices and zip code)

(310) 477-0354

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol(s)	Name of each Exchange on which registered
Common stock, $0.001 par value	RSSS	The Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02

Results of Operations and Financial Condition.

On May 9, 2024, the Registrant announced its financial results for the third quarter ended March 31, 2024. A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.

Item 9.01.

Financial Statements and Exhibits

(d)

Exhibits.

	Exhibit Number	Description

	99.1	Press Release issued May 9, 2024 entitled “Research Solutions Reports Fiscal Third Quarter 2024 Results”.

	104	Cover Page Interactive Data File (embedded as Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RESEARCH SOLUTIONS, INC.

Date: May 9, 2024	By:	/s/ William Nurthen
		William Nurthen
		Chief Financial Officer

Exhibit 99.1

FOR IMMEDIATE RELEASE

Research Solutions Reports Fiscal Third Quarter 2024 Results

Reports 17% Revenue Increase, ARR of $16.6 Million

Positive Net Income and Record Adjusted EBITDA

HENDERSON, Nev., May 9, 2024 — Research Solutions, Inc. (NASDAQ: RSSS), a trusted partner providing cloud-based workflow solutions to accelerate research for R&D-driven organizations, reported financial results for its fiscal third quarter ended March 31, 2024.

Fiscal Third Quarter 2024 Summary (compared to prior-year quarter)

	·	Total revenue of $12.1 million, a 17% increase.
	·	Platform revenue up 76% to $4.0 million. Annual Recurring Revenue (“ARR”) up 82% to $16.6 million, which includes approximately $11.7 million of B2B recurring revenue and $4.9M of B2C recurring revenue.
	·	Gross profit up 36%. Total gross margin improved 630 basis points to 45.2%.
	·	Net income of $76,000 or $0.00 per diluted share, compared to $237,000 or $0.01 per diluted share.
	·	Adjusted EBITDA of $961,000, a Company quarterly record, compared to $559,000.
	·	Quarterly cash flow from operations of over $2 million, also a Company quarterly record, compared to $0.8 million.

“Our third quarter performance reflects the first full quarter of contribution from Scite and continued progress integrating Scite and ResoluteAI within our Article Galaxy platform. While we realized some anticipated churn in ResoluteAI ARR in the quarter, we experienced strong growth in both Scite B2B and B2C ARR, closing some large cross-sell opportunities with existing customers,” said Roy W. Olivier, President and CEO of Research Solutions. “During the quarter we launched two new product offerings, Technology Landscape and Clinical Trial Landscape, both of which harness our ability to simultaneously search across multiple datasets, extracting and synthesizing insights into use case specific outputs as part of our strategy to deliver workflows that save time for our customers. The highly specialized value proposition for our product offerings continues to grow as we serve as a critical piece of the research process, giving users the opportunity to effectively discover, acquire and manage the most relevant content all in one place. Overall, we believe our offerings and expanded addressable market will deliver meaningful growth and long-term value for our shareholders.”

Fiscal Third Quarter 2024 Results

Total revenue was $12.1 million, a 17% increase from $10.3 million in the year-ago quarter primarily driven by increased platform revenue from the prior-year period which included a full quarter of revenue from the acquisitions of ResoluteAI and Scite.

Platform subscription revenue for the quarter was $4.0 million, a 76% year-over-year increase. The increase was primarily due to the acquisitions of ResoluteAI and Scite, as well as organic growth in the core Article Galaxy platform. The quarter ended with annual recurring revenue of $16.6 million, up 82% year-over-year (see the company’s definition of annual recurring revenue below).

Transaction revenue was $8.2 million, compared to $8.1 million in the third quarter of fiscal 2023. This quarter represents the first comparable period following the acquisition of contracts from FIZ Karlsruhe, which was effective January 1, 2023. The transaction active customer count for the quarter was 1,426, compared to 1,417 customers in the prior-year quarter (see the company's definition of active customer accounts and transactions below).

Total gross margin improved 630 basis points from the prior-year quarter to 45.2%. The increase was primarily driven by the continued revenue mix shift to the higher-margin Platforms business, as well as a modest increase in margins in the transactions business.

Total operating expenses were $5.4 million, compared to $3.9 million in the third quarter of 2023. The increase was primarily related to the additional expense base associated with the acquisitions of ResoluteAI and Scite.

Net income in the third quarter was $76,000, or $0.00 per share on a fully diluted basis, compared to $237,000, or $0.01 per diluted share, in the prior-year quarter. Adjusted EBITDA was $961,000, compared to $559,000 in the year-ago quarter (see definition and further discussion about the presentation of Adjusted EBITDA, a non-GAAP term, below).

Conference Call

Research Solutions President and CEO Roy W. Olivier and CFO Bill Nurthen will host the conference call, followed by a question and answer period.

Date: Thursday, May 9, 2024

Time: 5:00 p.m. ET (2:00 p.m. PT)

Dial-in number: 1-785-424-1699

Conference ID: RESEARCH

The conference call will be broadcast live and available for replay until June 9, 2024 by dialing 1-412-317-6671 and using the replay ID 11155728, and via the investor relations section of the company's website at http://researchsolutions.investorroom.com/.

Fiscal Third Quarter Financial and Operational Summary Tables vs. Prior-Year Quarter

	Quarter Ended March 31,												Nine Months Ended March 31,
	2024			2023			Change			% Change			2024			2023			Change			% Change
Revenue:
Platforms	$	3,953,403		$	2,249,632		$	1,703,771			75.7	%	$	9,679,179		$	6,379,871		$	3,299,308			51.7	%
Transactions	$	8,162,269		$	8,092,794			69,475			0.9	%	$	22,811,206		$	21,363,864			1,447,342			6.8	%
Total Revenue		12,115,672			10,342,426			1,773,246			17.1	%		32,490,385			27,743,735			4,746,650			17.1	%
Gross Profit:
Platforms		3,382,051			1,981,002			1,401,049			70.7	%		8,239,028			5,627,695			2,611,333			46.4	%
Transactions		2,099,881			2,046,271			53,610			2.6	%		5,758,272			5,152,653			605,619			11.8	%
Total Gross Profit		5,481,932			4,027,273			1,454,659			36.1	%		13,997,300			10,780,348			3,216,952			29.8	%
Gross profit as a % of revenue:
Platforms		85.5	%		88.1	%		-2.5	%					85.1	%		88.2	%		-3.1	%
Transactions		25.7	%		25.3	%		0.4	%					25.2	%		24.1	%		1.1	%
Total Gross Profit		45.2	%		38.9	%		6.3	%					43.1	%		38.9	%		4.2	%
Operating Expenses:
Sales and marketing		1,122,365			642,624			479,741			74.7	%		2,612,308			1,830,448			781,860			42.7	%
Technology and product development		1,371,754			953,677			418,077			43.8	%		3,952,891			2,751,099			1,201,792			43.7	%
General and administrative		2,027,074			1,871,591			155,483			8.3	%		6,593,791			5,004,679			1,589,112			31.8	%
Depreciation and amortization		309,898			18,332			291,566			1590.5	%		525,267			30,486			494,781			1623.0	%
Stock-based compensation		541,002			480,458			60,544			12.6	%		1,729,271			1,264,522			464,749			36.8	%
Foreign currency translation loss		22,177			(72,547	)		94,724			NM			15,059			(84,210	)		99,269			NM
Total Operating Expenses		5,394,270			3,894,135			1,500,135			38.5	%		15,428,587			10,797,024			4,631,563			42.9	%
Income (loss) from operations		87,663			133,139			(45,476	)		-34.2	%		(1,431,286	)		(16,675	)		(1,414,611	)		8483.2	%
Other Income (Expenses):
Other income		31,228			104,331			(73,103	)		-70.1	%		547,965			218,095			329,870			151.3	%
Provision for income taxes		(42,590	)		(628	)		(41,962	)		NM			(82,049	)		(5,543	)		(76,506	)		NM
Total Other Income (Expenses):		(11,362	)		103,703			(115,065	)		NM			465,916			212,552			253,364			119.2	%
Net income (loss)	$	76,301		$	236,842			(160,541	)		-67.8	%	$	(965,370	)	$	195,877			(1,161,247	)		NM
Adjusted EBITDA	$	960,740		$	559,382		$	401,358			71.8	%	$	838,311		$	1,194,123		$	(355,812	)		-29.8	%

	Quarter Ended March 31,										Nine Months Ended March 31,
	2024		2023		Change			% Change			2024		2023		Change		% Change
Platforms:
B2B ARR (Annual recurring revenue*):
Beginning of Period	$	11,614,748	$	8,776,977	$	2,837,771			32.3	%	$	9,444,130	$	7,922,188	$	1,521,942		19.2	%
Incremental ARR		38,315		330,704		(292,389	)		-88.4	%		2,208,933		1,185,493		1,023,440		86.3	%
End of Period	$	11,653,063	$	9,107,681	$	2,545,382			27.9	%	$	11,653,063	$	9,107,681	$	2,545,382		27.9	%
Deployments:
Beginning of Period		942		790		152			19.2	%		835		733		102		13.9	%
Incremental Deployments		41		25		16			64.0	%		148		82		66		80.5	%
End of Period		983		815		168			20.6	%		983		815		168		20.6	%
ASP (Average sales price):
Beginning of Period	$	12,330	$	11,110	$	1,220			11.0	%	$	11,310	$	10,808	$	502		4.6	%
End of Period	$	11,855	$	11,175	$	680			6.1	%	$	11,855	$	11,175	$	680		6.1	%
B2C ARR (Annual recurring revenue*):
Beginning of Period	$	3,954,090	$	-	$	3,954,090					$	-	$	-	$	-
Incremental ARR		948,885		-		948,885			NM			4,902,975		-		4,902,975		NM
End of Period	$	4,902,975	$	-	$	4,902,975			NM		$	4,902,975	$	-	$	4,902,975		NM

Total ARR (Annualized recurring revenue):	$	16,556,038	$	9,107,681	$	7,448,357			81.8	%	$	16,556,038	$	9,107,681	$	7,448,357		81.8	%

Transaction Customers:
Corporate customers		1,105		1,116		(11	)		-1.0	%		1,086		986		100		10.1	%
Academic customers		321		301		20			6.6	%		320		300		20		6.7	%
Total customers		1,426		1,417		9			0.6	%		1,406		1,286		120		9.3	%

Active Customer Accounts, Transactions and Annual Recurring Revenue

The company defines active customer accounts as the sum of the total quantity of customers per month for each month in the period divided by the respective number of months in the period. The quantity of customers per month is defined as customers with at least one transaction during the month.

A transaction is an order for a unit of copyrighted content fulfilled or managed in the Platform.

The company defines annual recurring revenue (“ARR”) as the value of contracted Platform subscription recurring revenue normalized to a one-year period. For B2C ARR, this includes the annualized value of monthly subscriptions, meaning their monthly value multiplied by twelve.

Use of Non-GAAP Measure – Adjusted EBITDA

Research Solutions’ management evaluates and makes operating decisions using various financial metrics. In addition to the company’s GAAP results, management also considers the non-GAAP measure of Adjusted EBITDA. Management believes that this non-GAAP measure provides useful information about the company’s operating results.

The tables below provide a reconciliation of this non-GAAP financial measure with the most directly comparable GAAP financial measure. Adjusted EBITDA is defined as net income (loss), plus interest expense, other income (expense), foreign currency transaction loss, provision for income taxes, depreciation and amortization, stock-based compensation, gain on sale of discontinued operations, and other potential adjustments that may arise. Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):

	Quarter Ended March 31,												Nine Months Ended March 31,
	2024			2023			Change			% Change			2024			2023			Change			% Change
Net Income (loss)	$	76,301		$	236,842		$	(160,541	)		-67.8	%	$	(965,370	)	$	195,877		$	(1,161,247	)		NM
Add (deduct):																				-
Other income (expense)		(31,228	)		(104,331	)		73,103			-70.1	%		(547,965	)		(218,095	)		(329,870	)		151.3	%
Foreign currency translation loss		22,177			(72,547	)		94,724			NM			15,059			(84,210	)		99,269			117.9	%
Provision for income taxes		42,590			628			41,962			NM			82,049			5,543			76,506			NM
Depreciation and amortization		309,898			18,332			291,566			1590.5	%		525,267			30,486			494,781			1623.0	%
Stock-based compensation		541,002			480,458			60,544			12.6	%		1,729,271			1,264,522			464,749			36.8	%
Gain on sale of disc. ops.		-			-			-						-			-			-
Adjusted EBITDA	$	960,740		$	559,382		$	401,358			71.8	%	$	838,311		$	1,194,123		$	(355,812	)		-29.8	%

About Research Solutions

Research Solutions, Inc. (NASDAQ: RSSS) provides cloud-based technologies to streamline the process of obtaining, managing, and creating intellectual property. Founded in 2006 as Reprints Desk, the company was a pioneer in developing solutions to serve researchers. Today, more than 70 percent of the top pharmaceutical companies, prestigious universities, and emerging businesses rely on Article Galaxy, the company's SaaS research platform, to streamline access to the latest scientific research and data with 24/7 customer support. For more information and details, please visit www.researchsolutions.com

Important Cautions Regarding Forward-Looking Statements

Certain statements in this press release may contain "forward-looking statements" regarding future events and our future results. All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the markets in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects", "intends," "plans," "believes," "seeks," "estimates," "endeavors," "strives," "may," or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward-looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Such risks and uncertainties include those factors described in the Company's most recent annual report on Form 10-K, as such may be amended or supplemented by subsequent quarterly reports on Form 10-Q, or other reports filed with the Securities and Exchange Commission. Examples of forward-looking statements in this release include statements regarding enhanced product offerings, additional customers, and the Company’s prospects for growth. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company's filings with the Securities and Exchange Commission.

Research Solutions, Inc. and Subsidiaries

Consolidated Balance Sheets

	March 31,
	2024			June 30,
	(unaudited)			2023
Assets
Current assets:
Cash and cash equivalents	$	4,221,424		$	13,545,333
Accounts receivable, net of allowance of $103,319 and $85,015, respectively		7,323,379			6,153,063
Prepaid expenses and other current assets		635,000			400,340
Prepaid royalties		1,004,790			1,202,678
Total current assets		13,184,593			21,301,414

Non-current assets:
Property and equipment, net of accumulated depreciation of $920,918 and $881,908, respectively		94,078			70,193
Intangible assets, net of accumulated amortization of $1,237,311 and $747,355, respectively ($10,527,713 provisional)		11,029,679			462,068
Goodwill (provisional)		16,493,763			—
Deposits and other assets		1,086			1,052
Total assets	$	40,803,199		$	21,834,727

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	9,011,868		$	8,079,516
Deferred revenue		8,870,316			6,424,724
Total current liabilities		17,882,184			14,504,240

Non-current liabilities:
Contingent earnout liability		8,792,756			—
Total liabilities		26,674,940			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; 32,281,424 and 29,487,508 shares issued and outstanding, respectively		32,281			29,487
Additional paid-in capital		37,695,960			29,941,873
Accumulated deficit		(23,488,019	)		(22,522,649	)
Accumulated other comprehensive loss		(111,963	)		(118,224	)
Total stockholders’ equity		14,128,259			7,330,487
Total liabilities and stockholders’ equity	$	40,803,199		$	21,834,727

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Operations and Other Comprehensive Loss

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2024			2023			2024			2023
Revenue:
Platforms	$	3,953,403		$	2,249,632		$	9,679,179		$	6,379,871
Transactions		8,162,269			8,092,794			22,811,206			21,363,864
Total revenue		12,115,672			10,342,426			32,490,385			27,743,735

Cost of revenue:
Platforms		571,352			268,630			1,440,151			752,176
Transactions		6,062,388			6,046,523			17,052,934			16,211,211
Total cost of revenue		6,633,740			6,315,153			18,493,085			16,963,387
Gross profit		5,481,932			4,027,273			13,997,300			10,780,348

Operating expenses:
Selling, general and administrative		5,084,371			3,875,802			14,903,319			10,766,537
Depreciation and amortization		309,898			18,332			525,267			30,486
Total operating expenses		5,394,269			3,894,134			15,428,586			10,797,023

Income (loss) from operations		87,663			133,139			(1,431,286	)		(16,675	)

Other income		31,228			104,331			547,965			218,095

Income (loss) from operations before provision for income taxes		118,891			237,470			(883,321	)		201,420
Provision for income taxes		(42,590	)		(628	)		(82,049	)		(5,543	)

Net income (loss)		76,301			236,842			(965,370	)		195,877

Other comprehensive income (loss):
Foreign currency translation		858			(4,149	)		6,261			(2,801	)
Comprehensive income (loss)	$	77,159		$	232,693		$	(959,109	)	$	193,076

Basic income (loss) per common share:
Net income (loss) per share	$	-		$	0.01		$	(0.03	)	$	0.01
Weighted average common shares outstanding		30,020,652			26,929,314			28,377,199			26,820,557

Diluted income (loss) per common share:
Net income (loss) per share	$	-		$	0.01		$	(0.03	)	$	0.01
Weighted average common shares outstanding		33,511,242			29,791,719			28,377,199			28,837,774

Research Solutions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	March 31,
	2024			2023
Cash flow from operating activities:
Net income (loss)	$	(965,370	)	$	195,877
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		525,267			30,486
Fair value of vested stock options		104,502			338,973
Fair value of vested restricted common stock		1,603,820			925,550
Fair value of vested unrestricted common stock		—			68,272
Modification cost of accelerated vesting of restricted common stock		20,949			—
Adjustment to contingent earnout liability		(268,287	)		—
Changes in operating assets and liabilities:
Accounts receivable		(739,883	)		(1,545,695	)
Prepaid expenses and other current assets		(156,026	)		(122,700	)
Prepaid royalties		197,888			47,760
Accounts payable and accrued expenses		498,584			947,789
Deferred revenue		768,347			986,044
Net cash provided by operating activities		1,589,791			1,872,356

Cash flow from investing activities:
Purchase of property and equipment		(57,761	)		(29,976	)
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		(10,081,507	)		(327,426	)

Cash flow from financing activities:
Proceeds from the exercise of stock options		—			57,500
Common stock repurchase		(522,024	)		(74,556	)
Payment of contingent acquisition consideration		(314,960	)		—
Net cash used in financing activities		(836,984	)		(17,056	)

Effect of exchange rate changes		4,791			1,850
Net increase (decrease) in cash and cash equivalents		(9,323,909	)		1,529,724
Cash and cash equivalents, beginning of period		13,545,333			10,603,175
Cash and cash equivalents, end of period	$	4,221,424		$	12,132,899

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	82,049		$	5,543

Non-cash investing and financing activities:
Contingent consideration accrual on asset acquisition	$	36,130		$	144,384

Contact

Steven Hooser or John Beisler

Three Part Advisors

(214) 872-2710

shooser@threepa.com; jbeisler@threepa.com

# # #

Cover	May 09, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 09, 2024
Entity File Number	1-39256
Entity Registrant Name	Research Solutions, Inc.
Entity Central Index Key	0001386301
Entity Tax Identification Number	11-3797644
Entity Incorporation, State or Country Code	NV
City Area Code	310
Local Phone Number	477-0354
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, $0.001 par value
Trading Symbol	RSSS
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false