UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~(Mark One)~~

x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~December 31, 2017~~September 30, 2023

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from _____________ to _____________

Commission File No. ~~000-53501~~001-39256

RESEARCH SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

~~Nevada~~		~~11-3797644~~
Nevada	11-3797644
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~15821 Ventura Blvd., Suite 165, Encino, California~~ Address not applicable¹		~~91436~~ N/A
(Address of principal executive offices)		(Zip Code)

~~(310)~~ (310) 477-0354

(Registrant’s telephone number, including area code)

~~(Former name, former address and former fiscal year, if changed since last report)~~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 Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesþNo¨◻

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þNo ¨◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer¨☐	Accelerated filer¨☐
Non-accelerated filer¨ ~~(Do not check if a smaller reporting company)~~þ	Smaller reporting companyþ
	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. ¨◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨☐Noþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.


Title of Class		Number of Shares Outstanding on ~~February 12, 2018~~November 3, 2023
Common Stock, $0.001 par value		~~24,147,582~~ 29,624,085

¹ In November 2019, we became a fully remote company. Accordingly, we do not currently have principal executive offices.

Table of Contents

PART 1 — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

December 31, June 30,
2017 2017
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,924,620 $ 5,773,950
Accounts receivable, net of allowance of $119,462 and $119,536, respectively 3,739,099 5,465,299
Prepaid expenses and other current assets 315,906 196,820
Prepaid royalties 736,145 566,282
Total current assets 9,715,770 12,002,351

Other assets:
Property and equipment, net of accumulated depreciation of $728,271 and $699,421, respectively 81,340 85,737
Intangible assets, net of accumulated amortization of $679,836 and $623,714, respectively - 41,870
Deposits and other assets 14,383 14,466
Right of use asset, net of accumulated amortization of $99,864 and $45,105, respectively 363,158 417,917
Total assets $ 10,174,651 $ 12,562,341

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses $ 5,053,770 $ 6,443,056
Deferred revenue 1,306,429 1,335,475
Lease liability, current portion 115,263 110,888
Total current liabilities 6,475,462 7,889,419

Long-term liabilities:
Lease liability, long-term portion 269,924 328,299
Total liabilities 6,745,386 8,217,718

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; 24,147,582 and 23,883,145 shares issued and outstanding, respectively 24,148 23,883
Additional paid-in capital 22,764,915 22,267,327
Accumulated deficit (19,273,403 ) (17,875,858 )
Accumulated other comprehensive loss (86,395 ) (70,729 )
Total stockholders’ equity 3,429,265 4,344,623
Total liabilities and stockholders’ equity $ 10,174,651 $ 12,562,341


	September 30,
	2023		June 30,
	(unaudited)		2023
Assets
Current assets:
Cash and cash equivalents	$	9,882,064	$	13,545,333
Accounts receivable, net of allowance of $82,392 and $85,015, respectively		6,460,188		6,153,063
Prepaid expenses and other current assets		314,052		400,340
Prepaid royalties		1,167,538		1,202,678
Total current assets		17,823,842		21,301,414

Goodwill (provisional)		3,238,794		—

Other assets:
Property and equipment, net of accumulated depreciation of $891,299 and $881,908, respectively		91,326		70,193
Intangible assets, net of accumulated amortization of $795,915 and $747,355, respectively ($2,064,706 provisional)		2,528,259		462,068
Deposits and other assets		1,033		1,052
Total assets	$	23,683,254	$	21,834,727

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	8,541,564	$	8,079,516
Deferred revenue		6,387,470		6,424,724
Total current liabilities		14,929,034		14,504,240

Long-term liabilities:
Contingent earnout liability		1,867,043		—
Total liabilities		16,796,077		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; 29,624,085 and 29,487,508 shares issued and outstanding, respectively		29,624		29,487
Additional paid-in capital		30,487,415		29,941,873
Accumulated deficit		(23,510,692)		(22,522,649)
Accumulated other comprehensive loss		(119,170)		(118,224)
Total stockholders’ equity		6,887,177		7,330,487
Total liabilities and stockholders’ equity	$	23,683,254	$	21,834,727

See notes to condensed consolidated financial statements

Table of Contents

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive ~~Loss~~Income (Loss)

(Unaudited)

Three Months Ended Six Months Ended
December 31, December 31,
2017 2016 2017 2016

Revenue:
Platforms $ 413,404 $ 219,137 $ 801,349 $ 391,209
Transactions 6,409,816 5,866,562 12,769,711 11,872,961
Total revenue 6,823,220 6,085,699 13,571,060 12,264,170

Cost of revenue:
Platforms 90,362 45,623 174,349 75,587
Transactions 4,996,988 4,664,690 9,911,402 9,379,689
Total cost of revenue 5,087,350 4,710,313 10,085,751 9,455,276
Gross profit 1,735,870 1,375,386 3,485,309 2,808,894

Operating expenses:
Selling, general and administrative 2,391,969 2,401,633 4,929,005 4,299,332
Depreciation and amortization 46,330 32,426 86,898 62,895
Total operating expenses 2,438,299 2,434,059 5,015,903 4,362,227
Loss from operations (702,429 ) (1,058,673 ) (1,530,594 ) (1,553,333 )

Other income (expenses):
Interest expense (3,000 ) (3,000 ) (6,000 ) (6,000 )
Other income 11,312 5,424 24,114 10,134
Total other income 8,312 2,424 18,114 4,134

Loss from operations before provision for income taxes (694,117 ) (1,056,249 ) (1,512,480 ) (1,549,199 )
Provision for income taxes (9,816 ) (9,337 ) (21,567 ) (22,942 )

Loss from continuing operations (703,933 ) (1,065,586 ) (1,534,047 ) (1,572,141 )

Discontinued operations:
Income from discontinued operations - 222,626 - 318,515
Gain from sale of discontinued operations 79,353 - 136,502 -
Income from discontinued operations 79,353 222,626 136,502 318,515

Net loss (624,580 ) (842,960 ) (1,397,545 ) (1,253,626 )

Other comprehensive income (loss):
Foreign currency translation (6,715 ) 5,195 (15,666 ) 1.912
Comprehensive loss $ (631,295 ) $ (837,765 ) $ (1,413,211 ) $ (1,251,714 )

Loss per common share:
Loss per share from continuing operations, basic and diluted $ (0.03 ) $ (0.05 ) $ (0.07 ) $ (0.06 )
Income per share from discontinued operations, basic and diluted $ - $ 0.01 $ 0.01 $ 0.01
Net loss per share, basic and diluted $ (0.03 ) $ (0.04 ) $ (0.06 ) $ (0.05 )
Weighted average common shares outstanding, basic and diluted 23,455,654 23,200,975 23,418,046 23,166,272


	Three Months Ended
	September 30,
	2023		2022

Revenue:
Platforms	$	2,600,192	$	2,019,967
Transactions		7,460,779		6,664,676
Total revenue		10,060,971		8,684,643

Cost of revenue:
Platforms		382,615		230,473
Transactions		5,646,791		5,104,922
Total cost of revenue		6,029,406		5,335,395
Gross profit		4,031,565		3,349,248

Operating expenses:
Selling, general and administrative		5,070,897		3,163,807
Depreciation and amortization		59,620		5,812
Total operating expenses		5,130,517		3,169,619

Income (loss) from operations		(1,098,952)		179,629

Other income		140,311		39,069

Income (loss) from operations before provision for income taxes		(958,641)		218,698
Provision for income taxes		(29,402)		(4,133)

Net income (loss)		(988,043)		214,565

Other comprehensive income (loss):
Foreign currency translation		(946)		(5,176)
Comprehensive income (loss)	$	(988,989)	$	209,389

Basic income (loss) per common share:
Net income (loss) per share	$	(0.04)	$	0.01
Weighted average common shares outstanding		27,052,445		26,718,171

Diluted income (loss) per common share:
Net income (loss) per share	$	(0.04)	$	0.01
Weighted average common shares outstanding		27,052,445		27,779,841

See notes to condensed consolidated financial statements

Table of Contents

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated ~~Statement~~Statements of ~~Stockholders'~~Changes in Stockholders’ Equity

For the ~~Six~~Three Months Ended ~~December 31, 2017~~September 30, 2023

(Unaudited)

Common Stock Additional
Paid-in Accumulated Other
Comprehensive Total
Stockholders'
Shares Amount Capital Deficit Loss Equity

Balance, July 1, 2017 23,883,145 $ 23,883 $ 22,267,327 $ (17,875,858 ) $ (70,729 ) $ 4,344,623

Fair value of vested stock options - - 389,236 - - 389,236

Fair value of vested restricted common stock 338,302 339 205,000 - - 205,339

Repurchase of common stock (87,100 ) (87 ) (102,868 ) - - (102,955 )

Modification cost of stock options - - 6,233 - - 6,233

Common stock issued upon exercise of stock options 13,235 13 (13 ) - - -

Net loss for the period - - - (1,397,545 ) - (1,397,545 )

Foreign currency translation - - - - (15,666 ) (15,666 )

Balance, December 31, 2017 24,147,582 $ 24,148 $ 22,764,915 $ (19,273,403 ) $ (86,395 ) $ 3,429,265


				Additional				Other		Total
	Common Stock			Paid-in		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity

Balance, July 1, 2023	29,487,508	$	29,487	$	29,941,873	$	(22,522,649)	$	(118,224)	$	7,330,487

Fair value of vested stock options	—		—		17,471		—		—		17,471

Fair value of vested restricted common stock	105,000		105		574,238		—		—		574,343

Repurchase of common stock	(18,603)		(19)		(46,116)		—		—		(46,135)

Common stock issued upon exercise of stock options	50,180		51		(51)		—		—		—

Net income for the period	—		—		—		(988,043)		—		(988,043)

Foreign currency translation	—		—		—		—		(946)		(946)

Balance, September 30, 2023	29,624,085	$	29,624	$	30,487,415	$	(23,510,692)	$	(119,170)	$	6,887,177

See notes to condensed consolidated financial statements

Table of Contents

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Cash Flows~~Changes in Stockholders’ Equity

~~(Unaudited)~~For the Three Months Ended September 30, 2022

(Unaudited)

Six Months Ended
December 31,
2017 2016

Cash flow from operating activities:
Net loss $ (1,397,545 ) $ (1,253,626 )
Adjustment to reconcile net loss to net cash provided by (used in) operating activities of operations:
Gain from sale of discontinued operations (136,502 ) -
Depreciation and amortization 86,898 62,895
Amortization of lease right 54,759 -
Fair value of vested stock options 389,236 228,491
Fair value of vested restricted common stock 205,339 177,194
Modification cost of stock options 6,233 -
Changes in operating assets and liabilities:
Accounts receivable 1,726,200 696,302
Prepaid expenses and other current assets 17,416 (56,140 )
Prepaid royalties (169,863 ) (1,044,250 )
Deposits and other assets - (11,374 )
Accounts payable and accrued expenses (1,389,286 ) 1,449,375
Deferred revenue (29,046 ) 527,695
Lease liability (54,000 ) -
Net cash provided by (used in) operating activities (690,161 ) 776,562

Cash flow from investing activities:
Purchase of property and equipment (29,284 ) (16,091 )
Purchase of intangible assets (14,252 ) (9,751 )
Net cash used in investing activities (43,536 ) (25,842 )

Cash flow from financing activities:
Common stock repurchase and retirement (102,955 ) (82,354 )
Net cash used in financing activities (102,955 ) (82,354 )

Effect of exchange rate changes (12,678 ) 3,386
Net increase (decrease) in cash and cash equivalents (849,330 ) 671,752
Cash and cash equivalents, beginning of period 5,773,950 6,076,875
Cash and cash equivalents, end of period $ 4,924,620 $ 6,748,627

Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 21,567 $ 22,942
Cash paid for interest $ 6,000 $ 6,000


				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	—		—		40,706		—		—		40,706

Fair value of vested restricted common stock	222,334		222		134,433		—		—		134,655

Fair value of vested unrestricted common stock	36,509		36		68,236		—		—		68,272

Repurchase of common stock	(9,659)		(9)		(18,053)		—		—		(18,062)

Common stock issued upon exercise of stock options	6,046		6		(6)		—		—		—

Net loss for the period	—		—		—		214,565		—		214,565

Foreign currency translation	—		—		—		—		(5,176)		(5,176)

Balance, September 30, 2022	27,330,878	$	27,331	$	28,298,171	$	(22,879,707)	$	(127,117)	$	5,318,678

See notes to condensed consolidated financial statements

Table of Contents

Research Solutions, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	September 30,
	2023		2022

Cash flow from operating activities:
Net income (loss)	$	(988,043)	$	214,565
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		59,620		5,812
Fair value of vested stock options		17,471		40,706
Fair value of vested restricted common stock		574,343		134,655
Fair value of vested unrestricted common stock		—		68,272
Changes in operating assets and liabilities:
Accounts receivable		(112,965)		81,756
Prepaid expenses and other current assets		109,946		70,908
Prepaid royalties		35,140		710,640
Accounts payable and accrued expenses		195,747		(1,037,057)
Deferred revenue		(646,830)		(181,378)
Net cash provided by (used in) operating activities		(755,571)		108,879

Cash flow from investing activities:
Purchase of property and equipment		(33,825)		(3,681)
Payment for acquisition, net of cash acquired		(2,718,253)		—
Payment for non-refundable deposit for asset acquisition		—		(297,450)
Net cash used in investing activities		(2,752,078)		(301,131)

Cash flow from financing activities:
Common stock repurchase		(46,135)		(18,062)
Payment of contingent acquisition consideration		(110,190)		—
Net cash used in financing activities		(156,325)		(18,062)

Effect of exchange rate changes		705		(5,172)
Net decrease in cash and cash equivalents		(3,663,269)		(215,486)
Cash and cash equivalents, beginning of period		13,545,333		10,603,175
Cash and cash equivalents, end of period	$	9,882,064	$	10,387,689

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	29,402	$	4,133

Non-cash investing and financing activities:
Contingent consideration accrual on asset acquisition	$	42,989	$	—

See notes to condensed consolidated financial statements

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RESEARCH SOLUTIONS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Six~~Three Months Ended ~~December 31, 2017~~September 30, 2023 and ~~2016~~2022 (Unaudited)

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 ~~two~~four wholly owned subsidiaries: Reprints Desk, Inc., (“Reprints Desk”) a Delaware corporation, ~~and~~including its wholly owned subsidiary Resolute Innovation, Inc., a Delaware corporation, 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 two service offerings to our customers: ~~annual licenses that allow customers to access and utilize certain premium features of our cloud based~~cloud-based software-as-a-service (“SaaS”) research ~~intelligence platform~~platforms (“Platforms”) typically sold via annual auto-renewing license agreements and the ~~transactional~~ sale of published scientific, technical, and medical (“STM”) content ~~managed, sourced and delivered through~~sold as individual articles (“Transactions”) either stand alone or via the core research Platform. When customers utilize the core research Platform ~~(“Transactions”). Platforms and~~to purchase Transactions ~~are~~it is packaged as a single solution that ~~enable~~enables life science and other research-intensive organizations to ~~speed up~~accelerate their research and development activities with faster, ~~single sourced~~ access and management of ~~content and data~~STM articles used throughout the intellectual property development lifecycle. The Platforms typically deliver a ROI to the customer via more effectively managing Transaction costs and saving researchers time during the research process.

Platforms

Our cloud-based SaaS research ~~intelligence platform consists~~Platforms consist of proprietary software and Internet-based ~~interfaces.~~interfaces sold to customers for an annual subscription fee. Legacy functionality allows customers to initiate orders, route orders for the lowest cost acquisition, manage transactions, obtain spend and usage reporting, automate authentication, and connect seamlessly to in-house and third-party software systems. Customers can also enhance the information resources they already own or license and collaborate around bibliographic information.

Additional functionality has recently been added to our ~~Platform~~Platforms in the form of interactive app-like ~~gadgets.~~components. An alternative to manual data filtering, identification and extraction, ~~gadgets~~the apps are designed to gather, augment, and extract data across a variety of formats, including bibliographic citations, tables of contents, RSS feeds, PDF files, XML feeds, and web content. We ~~are rapidly developing~~continue to develop new ~~gadgets~~apps in order to build an ecosystem of ~~gadgets.~~apps. Together, these ~~gadgets~~apps will provide researchers with an “all in one” toolkit, delivering efficiencies in core research workflows and knowledge creation processes.

Our ~~Platform is~~Platforms are deployed as a single, multi-tenant system across our entire customer base. Customers securely access the ~~Platform~~Platforms 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~~Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our ~~Platform’s~~Platforms’ efficiencies in scalability, stability and development costs to fuel rapid innovation and competitive advantage.

Transactions

~~Transactions~~

Our core research Platform provides our customers with a single source to the universe of published STM content that includes over 80 million existing STM articles and over one million newly published STM articles each year. STM content is sold to our customers on a 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. Our Platform provides our customers with a single source to the universe of published STM content that includes over 70 million existing STM articles and over one million newly published STM articles each year.

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deliver to them generally in under an ~~hour.~~hour; in many 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.

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.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017~~2023 filed with the SEC. The condensed consolidated balance sheet as of June 30, ~~2017~~2023 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the ~~Company's~~Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with 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, ~~analysis of impairments of recorded intangibles,~~ accruals for potential liabilities, assumptions made in valuing equity instruments issued for services or acquisitions, impairment related to intangible assets, useful lives of finite-lived intangible assets, and realization of deferred tax assets.

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~~customer’s financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each ~~customer's~~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 aan aggregate US Dollar equivalent of ~~$63,669~~$1,269,071 and ~~$93,359~~$1,760,323 at ~~December 31, 2017~~September 30, 2023 and June 30, ~~2017,~~2023, respectively, was held by Reprints Desk in accounts at financial institutions located in Europe.

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The Company has no customers that represent 10% of revenue or more for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2023 and ~~2016.~~

2022.

The Company has no customers that accounted for greater than 10% of accounts receivable at ~~December 31, 2017~~September 30, 2023 and June 30, ~~2017.~~

2023.

The following table summarizes vendor concentrations:

	Three Months Ended December 31,						Six Months Ended December 31,
	2017			2016			2017			2016

													Three Months Ended
													September 30,
													2023		2022
Vendor A		15	%		18	%		15	%		18	%	24	%	21	%
Vendor B		12	%			*		12	%			*	11	%	12	%
Vendor C		12	%			*		12	%			*

* Less than 10%

Revenue Recognition

The ~~Company’s policy~~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 ~~have been performed, risk of loss and title~~are transferred to a customer, in an amount that reflects the ~~product transfers~~consideration that the Company expects to ~~the customer, the selling price is fixed~~receive in exchange for those goods or ~~determinable, and collectability is reasonably assured. We generate revenue by providing~~services. The Company derives its revenues from two ~~service offerings to our customers:~~sources: annual licenses that allow customers to access and utilize certain premium features of our ~~cloud based~~cloud-based SaaS research intelligence ~~platform~~platforms (Platforms) and the ~~transaction~~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:

8●

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.~~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.

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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 ~~only~~provided all other revenue recognition criteria have been met.

Revenue by Geographical Region

The following table summarizes revenue by geographical region:


	Three Months Ended
	September 30,
	2023				2022
United States	$	5,861,032	58.3	%	$	5,043,083	58.1	%
Europe		3,155,709	31.4	%		3,009,521	34.6	%
Rest of World		1,044,230	10.4	%		632,039	7.3	%
Total	$	10,060,971	100	%	$	8,684,643	100	%

Accounts Receivable by Geographical Region

The following table summarizes accounts receivable by geographical region:


	As of September 30, 2023				As of June 30, 2023
United States	$	3,690,748	57.1	%	$	3,727,977	60.6	%
Europe		1,975,110	30.6	%		1,763,044	28.7	%
Rest of World		794,330	12.3	%		662,042	10.8	%
Total	$	6,460,188	100	%	$	6,153,063	100	%

Business Combinations

The Company accounts for its business combinations using the acquisition method of accounting where the purchase consideration is allocated to the tangible and intangible assets acquired, and liabilities assumed, based on their respective fair values as of the acquisition date. The excess of the fair value of the purchase consideration over the estimated fair values of the net assets acquired is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Intangible Assets

Amortizable finite-lived identifiable intangible assets consist of a developed technology and customer relationships acquired in the acquisition of ResoluteAI effective July 28,2023 (See Note 5), and are stated at cost less accumulated amortization. The developed technology and customer relationships are being amortized over the estimated average useful lives of 8 to 10 years. The Company follows ASC 360 in accounting for finite-lived intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. As of September 30, 2023, the Company determined there were no indicators of impairment of its intangible assets.

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Goodwill

Goodwill consists of the excess of the cost of ResoluteAI (see Note 5) over the fair value of amounts assigned to assets acquired and liabilities assumed. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the ~~selling price~~carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is ~~fixed~~to perform an annual impairment testing for its reporting units on June 30 of each fiscal year.

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 ~~determinable, and collectability~~when the consideration is ~~reasonably assured.~~due, from the customer.

~~Deferred Revenue~~

~~Customer deposits and billings or~~Cash payments received or due in advance of ~~revenue recognition~~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.

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 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. 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~~non-employees for services. The Company accounts for such grants issued and vesting based on ASC 718, whereby the ~~market price~~value of the ~~Company’s common stock~~award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company recognizes the fair value of stock-based compensation within its Statements of Operations with classification depending on the nature of the services rendered.

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 ~~portion~~equity instruments repurchased at the repurchase date. Any excess of the ~~award that is ultimately expected to vest is recognized as expense~~repurchase price over the required service period in the Company's Statements of Operations. The Company accounts for share-based payments to non-employees in accordance with Topic 505 of the FASB Accounting Standards Codification, whereby thefair value of the ~~stock~~instruments repurchased shall be recognized as additional compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates. cost.

Foreign Currency

The accompanying condensed 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.

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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 ~~gain~~loss of ~~$485~~$6,620 and ~~$12,872,~~$72,516 for the three ~~and six~~ months ended ~~December 31, 2017, respectively~~September 30, 2023 and ~~a loss of $17,631 and 20,955, for the three and six months ended December 31, 2016,~~2022, respectively. Cash denominated in Euros and British Pounds with aan aggregate US Dollar equivalent of ~~$63,669~~$1,269,071 and ~~$93,359~~$1,760,323 at ~~December 31, 2017~~September 30, 2023 and June 30, ~~2017,~~2023, respectively, was held in accounts at financial institutions located in Europe.

The following table summarizes the exchange rates used:

	Six Months Ended December 31,				Year Ended June 30,
	2017		2016		2017		2016

									Three Months Ended		Year Ended
									September 30,		June 30,
									2023	2022	2023	2022
Period end Euro : US Dollar exchange rate		1.20		1.09		1.09		1.11	1.06	0.98	1.09	1.05
Average period Euro : US Dollar exchange rate		1.17		1.11		1.09		1.11	1.10	1.01	1.05	1.13


Period end GBP : US Dollar exchange rate									1.22	1.11	1.27	1.21
Average period GBP : US Dollar exchange rate									1.28	1.19	1.20	1.34

Period end Mexican Peso : US Dollar exchange rate		0.05		0.05		0.05		0.05	0.06	0.05	0.06	0.05
Average period Mexican Peso : US Dollar exchange rate		0.05		0.05		0.05		0.06	0.06	0.05	0.05	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 ~~stock holders~~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 ~~December 31, 2017~~September 30, 2023 potentially dilutive securities include options to acquire ~~3,185,435~~2,590,024 shares of common stock and ~~warrants to acquire 1,985,000 shares~~unvested restricted common stock of ~~common stock.~~2,436,605. At ~~December 31, 2016~~September 30, 2022 potentially dilutive securities include options to acquire ~~3,122,277~~3,125,372 shares of common stock and ~~warrants to acquire 1,985,000 shares~~unvested restricted common stock of ~~common stock.~~568,240. 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 three ~~and six~~ months ended ~~December 31, 2017 and 2016~~September 30, 2023 because all stock options, warrants, and unvested restricted common stock are anti-dilutive. For the three months ended September 30, 2022, the calculation of diluted earnings per share includes unvested restricted common stock, stock options and warrants, calculated under the treasury stock method.

Recently Issued Accounting Pronouncements

In ~~May 2014,~~June 2016, the FASB issued ~~Accounting Standards Update (ASU) No. 2014-09,~~~~Revenue from Contracts with Customers~~. ASU ~~2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with~~2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a ~~principle based~~forward-looking approach ~~for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue~~ based on ~~the value~~current expected credit losses (“CECL”) to estimate credit losses on certain types of ~~transferred goods or services as they occur~~financial instruments, including trade receivables. This may result in the ~~contract. The~~earlier recognition of allowances for losses. ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-092016-13 is effective for ~~interim~~the Company beginning July 1, 2023, and ~~annual periods beginning after December 15, 2017. Early~~early adoption is ~~permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities can transition to~~permitted. The Company does not believe the ~~standard either retrospectively or as a cumulative-effect adjustment as~~potential impact of the ~~date~~new guidance and related codification improvements will be material to its financial position, results of ~~adoption. Management is currently assessing the impact the adoption of ASU 2014-09~~operations and ~~has not determined the effect of the standard on our ongoing financial reporting.~~

cash flows.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the ~~Company's~~Company’s present or future consolidated financial statements.

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Note 3. Line of Credit

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 matures on ~~December 31, 2019,~~February 28, 2024, and is subject to certain financial and performance covenants with which we were in compliance as of ~~December 31, 2017.~~September 30, 2023. Financial covenants include maintaining an adjusted quick ratio of unrestricted cash and net accounts receivable, divided by current liabilities plus debt less deferred revenue of at least 1.15 to 1.0, and maintaining tangible net worth of $1,500,000, plus 50% of net income for the fiscal quarter ended from and after December 31, 2017, plus 50% of the dollar value of equity issuances after October 1, 2017 and the principal amount of subordinated debt.1.0. The line of credit bears interest at an annual rate equal to the greater of 1% above the prime rate ~~plus 2.25% for periods in which we maintain an adjusted quick ratio of 1.3 to 1.0 (the “Streamline Period”),~~ and ~~at the prime rate plus 5.25% when a Streamline Period is not in effect.~~5.0%. The interest rate on the line of credit was ~~6.75%~~9.5% as of ~~December 31, 2017.~~September 30, 2023. The line of credit is secured by the Company’s consolidated assets.

Pursuant to the Amended and Restated Loan and Security Agreement dated October 31, 2017 among the Company, Reprints Desk, Inc. and SVB (the “SVB LSA”), the Company was required to direct account debtors to deliver or transmit all proceeds of accounts remitted to the Company and its subsidiaries into a lockbox account as specified by SVB, and to maintain its and its subsidiaries’ primary operating and other deposit accounts with SVB.

There were no outstanding borrowings under the line as of ~~December 31, 2017~~September 30, 2023 and June 30, ~~2017,~~2023, respectively. As of ~~December 31, 2017,~~September 30, 2023, there was approximately ~~$2,490,000~~$2,355,000 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. The Company has confirmed that the Loan and Security Agreement remains in effect post this transaction and that, it continues to have access to the revolving line of credit.

~~Note 4. Lease Obligations~~

~~During the period ended March 31, 2017,~~SVB Bridge Bank agreed that the Company can lower its 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 the Company continues to evaluate the SVB LSA. The Company has established additional banking relationships with Bank of America, N.A. and PNC Bank, N.A. At September 30, 2023, the Company held cash at Bank of America, N.A. of $1,516,191 and at PNC Bank, N.A. of $3,496,791.

Subsequent to September 30, 2023, FCB informed the Company of certain defaults under the SVB LSA resulting from the Company’s 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. The Company became aware of additional technical defaults following FCB’s outreach, and such defaults substantially related to the Company’s moves to promptly diversify its cash position following the collapse of Silicon Valley Bank in March of 2023. On November 14, 2023, the Company, Reprints Desk and FCB entered into a ~~48 month non-cancellable lease for~~Fifth Amendment to Amended and Restated Loan and Security Agreement, Consent and Forbearance Agreement (the “Fifth Amendment”) pursuant to which, among other matters, FCB agreed to forbear from exercising its ~~office facilities that will require monthly payments ranging from $10,350~~remedies under the SVB LSA in connection with the existing events of default, and agreed to ~~$11,475 through January 2021. In accounting for~~waive the ~~lease,~~existing events of default provided the Company ~~adopted ASU 2016-02, Leases which requires a lessee to record a right-of-use asset~~regains compliance with the adjusted quick ratio covenant and ~~a corresponding lease liability at~~ the ~~inception~~operating accounts covenants by January 30, 2024, no other events of ~~the lease initially measured at the present value of the lease payments. The Company classified the lease as an operating lease~~defaults have occurred and determined that the fair value of the lease liability at the inception of the lease was $463,000 using a discount rate of 3.75%. During the six months ended December 31, 2017, the Company made payments of $54,000 towards the lease liability. As of December 31, 2017 and June 30, 2017, lease liability amounted to $385,187 and $439,187, respectively.

~~ASU 2016-02 requires recognition~~no forbearance termination events (as listed in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term, generally on a straight-line basis. Rent expense, including real estate taxes, for the six months ended December 31, 2017 and 2016 was $62,881 and $32,564, respectively. During the six months ended December 31, 2017, the Company reflected amortization of right of use asset of $54,759 related to this lease.Fifth Amendment) have occurred.

Note 5.4. 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,

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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 ~~December 31, 2017,~~September 30, 2023, there were ~~1,592,130~~1,390,927 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.

The majority of awards issued under the ~~Plans~~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
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at June 30, 2017		3,130,310			1.15		2,994,851			1.15		135,459			1.07

																All Options			Vested Options			Unvested Options
																	Weighted			Weighted			Weighted
																	Average			Average			Average
																	Exercise			Exercise			Exercise
																Shares	Price		Shares	Price		Shares	Price
Outstanding at June 30, 2023																2,909,574	$	1.87	2,865,593	$	1.86	43,981	$	2.47
Granted		707,000			1.31		685,000			1.31		22,000			1.20	—		—	—		—	—		—
Options vesting		-			-		48,250			1.06		(48,250	)		1.06	—		—	13,765		2.43	(13,765)		2.43
Exercised		(175,000	)		1.10		(175,000	)		1.10		-			-	(319,550)		2.03	(319,550)		2.03	—		—
Forfeited/Cancelled		(476,875	)		1.31		(471,042	)		1.32		(5,833	)		1.09
Outstanding at December 31, 2017		3,185,435		$	1.16		3,082,059		$	1.16		103,376		$	1.07
Forfeited																—		—	—		—	—		—
Outstanding at September 30, 2023																2,590,024	$	1.85	2,559,808	$	1.84	30,216	$	2.48

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 six months ended December 31, 2017 and 2016.

Six Months Ended
December 31,
2017 2016
Expected dividend yield 0 % 0 %
Risk-free interest rate 1.45% - 2.23 % 1.27% - 1.76 %
Expected life (in years) 2.60 - 6.0 5 - 6
Expected volatility 75% - 76 % 79.2% - 81.4 %

The weighted average remaining contractual life of all options outstanding as of ~~December 31, 2017~~September 30, 2023 was ~~6.04~~5.34 years. The remaining contractual life for options vested and exercisable at ~~December 31, 2017~~September 30, 2023 was ~~5.98~~5.31 years. Furthermore, the aggregate intrinsic value of options outstanding as of ~~December 31,~~September 30, 2017 was ~~$434,042,~~$1,845,909, and the aggregate intrinsic value of options vested and exercisable ~~at December 31, 2017~~as of September 30, 2023 was ~~$421,343,~~$1,842,925, in each case based on the fair value of the Company’s common stock on ~~December 31, 2017.~~

September 30, 2023.

During the ~~six~~three months ended ~~December 31, 2017,~~September 30, 2023, the Company ~~granted 707,000~~did not grant any options to ~~employees with a fair value of $383,890.~~employees. The total fair value of options that vested during the ~~six~~three months ended ~~December 31, 2017~~September 30, 2023 was ~~$389,236~~$17,471 and is included in selling, general and administrative expenses in the accompanying statement of operations. ~~During the six months ended December 31, 2017, the Company granted 13,235 shares~~As of ~~common stock upon the exercise of 175,000 options on a cashless basis. In addition, on~~ September 30, 2017, options originally issued to an employee to purchase an aggregate of 17,600 shares of the Company’s common stock were modified to extend the exercise period from three months to approximately five years. Stock-based compensation cost of $6,233 was recorded during the six months ended December 31, 2017 as a result of the modification.

~~As of December 31, 2017,~~2023, the amount of unvested compensation related to stock options was ~~$68,175~~$39,105 which will be recorded as an expense in future periods as the options vest. During the three months ended September 30, 2023, the Company issued 50,180 net shares of common stock upon the exercise of options underlying 319,550 shares of common stock.

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The following table presents the information regarding stock options outstanding and exercisable as of ~~December 31, 2017 is as follows:~~September 30, 2023:

Option Exercise Price		Options Outstanding		Remaining Contractual Life (in years)		Options Exercisable

								Option		Remaining
								Exercise	Options	Contractual	Options
								Price	Outstanding	Life (in years)	Exercisable
$	0.59		8,150		4.50		8,150	0.70	225,000	2.18	225,000
	0.60		5,000		4.50		5,000
	0.65		6,150		4.50		6,150
	0.70		225,000		7.93		225,000
	0.77		59,500		5.76		59,500
	0.80		16,000		7.64		16,000
	0.90		25,667		6.31		25,667
	0.97		6,000		4.50		6,000
	1.00		300,249		2.60		300,247
	1.02		247,000		2.90		247,000
	1.05		457,529		8.63		415,530
	1.07		53,898		4.79		53,898
	1.09		156,165		7.95		116,790
	1.10		105,000		7.50		105,000
	1.14		3,674		4.50		3,674
	1.15		293,000		3.07		293,000
	1.20		353,414		9.57		331,414
	1.25		32,000		5.12		32,000
	1.30		263,000		4.18		263,000
	1.50		380,000		1.00		380,000
	1.75		1,067		4.50		1,067
	1.80		162,550		5.45		162,550
	1.85		24,000		5.09		24,000
	1.97		1,422		4.50		1,422
	Total		3,185,435				3,082,059
								0.77	25,000	0.88	25,000
								0.80	16,000	1.89	16,000
								0.90	15,000	1.85	15,000
								1.00	15,000	1.44	15,000
								1.05	305,000	2.90	305,000
								1.09	40,000	2.65	40,000
								1.10	105,000	1.75	105,000
								1.20	274,000	3.80	274,000
								1.59	25,000	4.61	25,000
								2.10	238,767	8.36	238,767
								2.13	216,708	7.14	216,708
								2.15	200,000	9.20	200,000
								2.17	35,955	7.62	29,962
								2.19	5,000	8.31	2,916
								2.40	302,833	5.13	302,833
								2.43	61,250	7.68	56,250
								2.45	98,000	6.85	98,000
								2.49	78,435	6.67	77,314
								2.50	20,000	5.63	20,000
								2.64	30,882	7.85	23,162
								2.67	33,194	7.97	24,896
								2.99	8,000	6.62	8,000
								3.13	208,000	6.12	208,000
								3.50	8,000	6.37	8,000
								Total	2,590,024		2,559,808

~~Warrants~~

~~The following table summarizes warrant activity:~~

Number of
Warrants Weighted
Average
Exercise
Price
Outstanding, June 30, 2017 1,985,000 1.25
Granted - -
Exercised - -
Expired/Cancelled - -
Outstanding, December 31, 2017 1,985,000 $ 1.25
Exercisable, June 30, 2017 1,985,000 $ 1.25
Exercisable, December 31, 2017 1,985,000 $ 1.25

~~There was no intrinsic value for all warrants outstanding as of December 31, 2017, based on the fair value of the Company’s common stock on December 31, 2017.~~

~~Additional information regarding warrants outstanding and exercisable as of December 31, 2017 is as follows:~~

Warrant
Exercise Price Warrants
Outstanding Remaining
Contractual
Life (in years) Warrants
Exercisable
$ 1.19 100,000 3.98 100,000
1.25 1,885,000 3.45 1,885,000
Total 1,985,000 1,985,000

Restricted Common Stock

Prior to July 1, ~~2017,~~2023, the Company issued ~~1,573,197~~5,184,592 shares of restricted common stock to employees valued at ~~$1,563,074,~~$7,503,186, of which ~~$1,150,136 had~~2,427,309 shares have vested, 279,489 shares with fair value of $312,156 have been forfeited, and $4,479,369 has been recognized as an expense. The balance of the non-vested shares of restricted common stock was 2,477,794 at June 30, 2023, with an aggregate fair value of $2,711,661.

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During the ~~six~~three months ended ~~December 31, 2017,~~September 30, 2023, the Company issued an additional ~~338,302~~105,000 shares of restricted stock to ~~employees. These~~employees with an aggregate fair value of $185,800. Of this amount, 5,000 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 of ~~the~~these stock awards was ~~$354,366~~$11,200 based on the market price of our common stock ~~ranging from $1.02 to $1.20~~price of $2.24 per share on the date of grant, which will be amortized over the ~~three-year~~range of a three year vesting period. ~~Restricted~~The remaining 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”). The LTEBP replaces 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 ~~grants have been made~~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 ~~2007~~LTEBP, 20,000 shares would vest upon our stock price achieving a 30-day VWAP of $3.00 per share, and ~~2017 Equity Compensation Plans.~~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 100,000 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 $174,600, computed using the Monte Carlo simulations on a binomial model with the assistance of a valuation specialist with a derived service period ranging from 1.19 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 program during the ~~six~~three months ended ~~December 31, 2017~~September 30, 2023 was ~~$205,339~~$574,343 and is included in selling, general and administrative expenses in the accompanying statements of operations. As of ~~December 31, 2017,~~September 30, 2023, the amount of unvested compensation related to issuances of restricted common stock was ~~$561,965,~~$2,323,118, which will be recognized as an expense in future periods as the shares vest. When calculating basic net income ~~(loss)~~ 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 2,436,605 shares are considered antidilutive and are excluded from that calculation.

The following table summarizes restricted common stock activity:

	Number of Shares			Fair Value			Weighted Average Grant Date Fair Value
Non-vested, June 30, 2017		513,194			412,938			0.92

												Weighted
												Average
									Number of			Grant Date
									Shares	Fair Value		Fair Value
Non-vested, June 30, 2023									2,477,794	$	2,711,661	$	1.52
Granted		338,302			354,366			1.05	105,000		185,800		1.77
Vested		(193,336	)		(205,339	)		0.90	(146,189)		(574,343)		2.06
Forfeited		-			-			-	—		—		—
Non-vested, December 31, 2017		658,160		$	561,965		$	0.99
Non-vested, September 30, 2023									2,436,605	$	2,323,118	$	1.50

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Common Stock ~~Repurchase~~Repurchases

Effective as of February 9, 2021, the Compensation Committee of our Board of Directors authorized the repurchase, during calendar year 2021 on the last day of each trading window and ~~Retirement~~

otherwise in accordance with our insider trading policies, of up to $400,000 of outstanding common stock (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. The Compensation Committee of our Board of Directors subsequently approved the extension of the repurchases under the same terms through the end of fiscal year 2024. 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 ~~six~~three months ended ~~December 31, 2017,~~September 30, 2023, the Company repurchased ~~87,100~~18,603 shares of our common stock from employees at an average market price of approximately ~~$1.18~~$2.48 per share for an aggregate amount of ~~$102,955. The shares~~$46,135. As of September 30, 2023, $104,960 remains under the current authorization to repurchase our outstanding common stock ~~were surrendered by employees to cover tax withholding obligations with respect to the vesting of restricted 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.

Note 5. Acquisitions

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 September 30, 2023, 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”). On September 30, 2023, $42,989 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 September 30, 2023, $96,121 of Bonus Amount payments were made for the 2023 fiscal year. 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 September 30, 2023, 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.

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 Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to ResoluteAI’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. 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.

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The total purchase consideration for ResoluteAI, net of cash acquired, was approximately $4.6 million. The consideration includes an initial payment of $2.7 million and a contingent earnout that has a fair value of $1.9 million as of September 30, 2023. 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.

The Company’s allocation of the purchase price at September 30, 2023 included $0.2 million of receivables, $0.1 million of other assets, $2.1 million of intangible assets and $3.2 million of goodwill. The intangible assets acquired are developed technology and customer relationships with estimated average useful lives of 8 to 10 years. The Company also assumed $0.2 million of payables, $0.6 million of deferred revenue and $0.2 million of other liabilities as part of the acquisition.

The preliminary allocation of purchase price to the assets acquired was based upon the estimated fair values at the date of acquisition. As of September 30, 2023, the Company has not completed its analysis for estimating the fair value of the assets acquired.

Note 6. ~~Gain~~Contingencies

Inflation Risk

The Company does 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 the Company’s operating costs could become subject to inflationary and interest rate pressures in the future, which would have the effect of increasing the Company’s operating costs, and which would put additional stress on the Company’s working capital resources.

Note 7. Subsequent Events

Subsequent to September 30, 2023, FCB informed the Company of certain defaults under the SVB LSA resulting from ~~Sale~~the Company’s violation of ~~Discontinued Operations (Reprints~~certain covenants regarding retaining operating cash with SVB, obtaining deposit account control agreements with respect to such accounts and ~~ePrints business line)~~

failing to maintain the required adjusted quick ratio. The Company became aware of additional technical defaults following FCB’s outreach, and such defaults substantially related to the Company’s moves to promptly diversify its cash position following the collapse of Silicon Valley Bank in March of 2023. On ~~June 30, 2017, we sold~~November 14, 2023, the ~~intangible assets of our~~Company, Reprints Desk and ~~ePrints business~~FCB entered into a Fifth Amendment to Amended and Restated Loan and Security Agreement, Consent and Forbearance Agreement (the “Fifth Amendment”) pursuant to ~~an Asset Purchase Agreement dated June 20, 2017. The aggregate net consideration for~~which, among other matters, FCB agreed to forbear from exercising its remedies under the ~~sale included earn-out payments~~SVB LSA in connection with the existing events of ~~45%~~default, and agreed to waive the existing events of ~~gross margin over~~default provided the ~~30-month period subsequent to~~Company regains compliance with the closing date. We have made a policy election to record the contingent consideration when the consideration is determined to be realizable (each 6-month period ending subsequent to the closing date). Contingent consideration determined to be realizable amounted to $136,502 for the six months ended December 31, 2017adjusted quick ratio covenant and the ~~corresponding receivable is included~~operating accounts covenants by January 30, 2024, no other events of defaults have occurred and no forbearance termination events (as listed in ~~prepaid expenses and other current assets and as a gain from~~ the ~~sale of discontinued operations.~~Fifth Amendment) have occurred.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Notice Regarding Forward-Looking Statements

The following discussion and analysis of our financial condition and results of operations for the three months ended September 30, ~~2017~~2023 and ~~2016~~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, ~~2017.~~2023.

We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. All forward-looking statements included in this report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update any such forward-looking statements.

Overview

Research Solutions was incorporated in the State of Nevada on November 2, 2006, and is a publicly traded holding company with ~~two~~four wholly owned ~~subsidiaries:~~subsidiaries as of September 30, 2023: Reprints Desk, Inc., a Delaware corporation, ~~and~~including its wholly owned subsidiary Resolute Innovation, Inc., a Delaware corporation, 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.

We provide two service offerings to our customers: ~~annual licenses that allow customers to access and utilize certain premium features of our cloud based~~cloud-based software-as-a-service (“SaaS”) research ~~intelligence platform~~platforms (“Platforms”) typically sold via annual auto-renewing license agreements and the ~~transactional~~ sale of published scientific, technical, and medical (“STM”) content ~~managed, sourced and delivered through~~sold as individual articles (“Transactions”) either stand alone or via our core research Platform. When customers utilize the core research Platform ~~(“Transactions”). Platforms and~~to purchase Transactions ~~are~~it is packaged as a single solution that ~~enable~~enables life science and other research-intensive organizations to ~~speed up~~accelerate their research and development activities with faster, ~~single sourced~~ access and management of ~~content and data~~STM articles used throughout the intellectual property development lifecycle. The Platforms typically deliver a ROI to the customer via more effectively managing Transaction costs and saving researchers time during the research process.

Platforms

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Transactions

~~Transactions~~

Our core research Platform allows customers 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.~~hour; in many 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.

Inflation Risk

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.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States, or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances. Actual results may differ under different estimates and assumptions.

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.

Revenue Recognition

~~Our policy~~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.

Revenues are recognized when control of the promised goods or services ~~have been performed, risk of loss and title~~are transferred to a customer, in an amount that reflects the ~~product transfers~~consideration that we expect to ~~the customer, the selling price is fixed~~receive in exchange for those goods or ~~determinable, and collectability is reasonably assured.~~services. We ~~generate revenue by providing~~derive our revenues from two ~~service offerings to our customers:~~sources: annual licenses that allow customers to access and utilize certain premium features of our ~~cloud based~~cloud-based SaaS research intelligence ~~platform~~platforms (Platforms) and the ~~transaction~~transactional sale of STM content managed, sourced and delivered through the Platform (Transactions).

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We apply the following five steps in order to determine the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our agreements:

●

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

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 ~~only when the selling price is fixed or determinable, and collectability is reasonably assured.~~provided all other revenue recognition criteria have been met.

Stock-Based Compensation

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 theThe fair value of our 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~~options is ~~ultimately expected to vest is recognized as expense over the required service period in our Statements of Operations. We estimate the fair value of restricted stock awards to employees and directors~~estimated using the ~~market price of our common stock on the date of grant, and the value of the portion of the award that is ultimately~~Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected to vest is recognized as expense over the required service period in our Statements of Operations. We account for share-based payments to non-employees in accordance with Topic 505 of the FASB Accounting Standards Codification, whereby the valuevolatility, expected life of the stock ~~compensation~~options or restricted stock, and future dividends. Compensation expense is recorded based upon the ~~measurement date as determined at either a)~~value derived from the ~~date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is~~Black-Scholes-Merton Option Pricing model and based on ~~awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at~~actual experience. The assumptions used in the ~~time of grant and revised, as necessary,~~Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in ~~subsequent periods if actual forfeitures differ from those estimates.~~ future periods.

Recent Accounting Pronouncements

Please refer to footnote 2 to the condensed consolidated financial statements contained elsewhere in this Form 10-Q for a discussion of Recent Accounting Pronouncements.

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Quarterly Information (Unaudited)

The following table sets forth unaudited and quarterly financial data for the most recent eight quarters:

	Dec. 31,			Sept. 30,			June 30,			Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2017			2017			2017			2017			2016			2016			2016			2016

																									Sept. 30,		June 30,		Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec 31,
																									2023		2023		2023		2022		2022		2022		2022		2021
Revenue:
Platforms	$	413,404		$	387,945		$	318,194		$	270,920		$	219,137		$	172,072		$	129,963		$	121,034		$	2,600,192	$	2,303,375	$	2,249,632	$	2,110,272	$	2,019,967	$	1,886,845	$	1,786,224	$	1,604,829
Transactions		6,409,816			6,359,895			6,521,313			6,372,679			5,866,562			6,006,399			6,025,972			6,394,127			7,460,779		7,656,342		8,092,794		6,606,394		6,664,676		6,675,164		6,971,128		6,267,458
Total revenue		6,823,220			6,747,840			6,839,507			6,643,599			6,085,699			6,178,471			6,155,935			6,515,161			10,060,971		9,959,717		10,342,426		8,716,666		8,684,643		8,562,009		8,757,352		7,872,287


Cost of revenue:
Platforms		90,362			83,987			71,097			58,367			45,623			29,964			23,426			21,557			382,615		275,110		268,630		253,073		230,473		240,214		219,051		231,668
Transactions		4,996,988			4,914,414			5,060,500			4,997,842			4,664,690			4,714,999			4,702,892			4,918,679			5,646,791		5,764,064		6,046,523		5,059,766		5,104,922		5,038,653		5,299,804		4,802,959
Total cost of revenue		5,087,350			4,998,401			5,131,597			5,056,209			4,710,313			4,744,963			4,726,318			4,940,236			6,029,406		6,039,174		6,315,153		5,312,839		5,335,395		5,278,867		5,518,855		5,034,627


Gross profit:
Platforms		323,042			303,958			247,097			212,553			173,514			142,108			106,537			99,477			2,217,577		2,028,265		1,981,002		1,857,199		1,789,494		1,646,631		1,567,173		1,373,161
Transactions		1,412,828			1,445,481			1,460,813			1,374,837			1,201,872			1,291,400			1,323,080			1,475,448			1,813,988		1,892,278		2,046,271		1,546,628		1,559,754		1,636,511		1,671,324		1,464,499
Total gross profit		1,735,870			1,749,439			1,707,910			1,587,390			1,375,386			1,433,508			1,429,617			1,574,925			4,031,565		3,920,543		4,027,273		3,403,827		3,349,248		3,283,142		3,238,497		2,837,660


Operating expenses:
Sales and marketing		769,406			899,695			988,962			963,784			854,724			580,778			520,402			525,681			685,016		455,030		642,624		666,608		521,216		691,368		543,496		518,357
Technology and product dev.																										1,244,579		991,093		953,677		922,132		875,290		1,049,430		971,959		868,236
General and administrative		1,308,483			1,363,486			1,326,798			1,251,807			1,226,181			1,211,008			902,667			1,011,670			2,542,868		1,649,333		1,871,590		1,613,664		1,519,424		1,663,671		1,629,371		1,616,135
Depreciation and amortization		46,330			40,568			36,893			33,906			32,426			30,469			29,702			30,310			59,620		22,163		18,332		6,342		5,812		5,507		4,988		4,260
Stock-based compensation expense		314,565			286,242			112,151			112,326			303,097			102,589			162,192			130,568
Stock-based comp. expense																										591,814		585,384		480,458		608,703		175,361		225,501		399,234		300,539
Foreign currency transaction loss (gain)		(485	)		(12,387	)		(6,362	)		6,272			17,631			3,324			994			(2,829	)		6,620		(37,743)		(72,547)		(84,179)		72,516		91,279		29,394		11,982
Total operating expenses		2,438,299			2,577,604			2,458,442			2,368,095			2,434,059			1,928,168			1,615,957			1,695,400			5,130,517		3,665,260		3,894,134		3,733,270		3,169,619		3,726,756		3,578,442		3,319,509
Other income (expenses and income taxes)		(1,504	)		(1,949	)		(6,425	)		1,599			(6,913	)		(11,895	)		(22,034	)		(37,238	)		110,909		120,463		103,703		73,913		34,936		5,347		(585)		264
Loss from continuing operations		(703,933	)		(830,114	)		(756,957	)		(779,106	)		(1,065,586	)		(506,555	)		(208,374	)		(157,713	)
Income from discontinued operations		-			-			113,314			141,616			222,626			95,889			155,385			190,089
Gain on sale of discontinued operations		79,353			57,149			241,196			-			-			-			-			-
Net income (loss)		(624,580	)		(772,965	)		(402,447	)		(637,490	)		(842,960	)		(410,666	)		(52,989	)		32,376			(988,043)		375,746		236,842		(255,530)		214,565		(438,267)		(340,530)		(481,585)

Basic income (loss) per common share:
Net income (loss) per share																									$	(0.04)	$	0.01	$	0.01	$	(0.01)	$	0.01	$	(0.02)	$	(0.01)	$	(0.02)
Basic weighted average common shares outstanding																										27,052,445		26,981,813		26,929,314		26,816,550		26,718,171		26,576,054		26,512,195		26,351,947

Diluted income (loss) per common share:
Net income (loss) per share																									$	(0.04)	$	0.01	$	0.01	$	(0.01)	$	0.01	$	(0.02)	$	(0.01)	$	(0.02)
Diluted weighted average common shares outstanding																										27,052,445		30,058,791		29,791,719		26,815,550		27,779,841		26,576,054		26,512,195		26,351,947

Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
2017 2017 2017 2017 2016 2016 2016 2016
Net income (loss):
Loss from continuing operations $ (703,933 ) $ (830,114 ) $ (756,957 ) $ (779,106 ) $ (1,065,586 ) $ (506,555 ) $ (208,374 ) $ (157,713 )
Income from discontinued operations 79,353 57,149 354,510 141,616 222,626 95,889 155,385 190,089
Net income (loss) $ (624,580 ) $ (772,965 ) $ (402,447 ) $ (637,490 ) $ (842,960 ) $ (410,666 ) $ (52,989 ) $ 32,376

Basic income (loss) per common share:
Loss per share from continuing operations $ (0.03 ) $ (0.04 ) $ (0.03 ) $ (0.03 ) $ (0.05 ) $ (0.02 ) $ (0.01 ) $ -
Income per share from discontinued operations $ - $ - $ 0.01 $ - $ 0.01 $ - $ - $ -
Net income (loss) per share $ (0.03 ) $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.04 ) $ (0.02 ) $ (0.01 ) $ -
Basic weighted average common shares outstanding 23,455,654 23,380,437 23,369,727 23,265,939 23,200,975 23,131,570 18,154,762 17,707,900

Diluted income (loss) per common share:
Loss per share from continuing operations $ (0.03 ) $ (0.04 ) $ (0.03 ) $ (0.03 ) $ (0.05 ) $ (0.02 ) $ (0.01 ) $ -
Income per share from discontinued operations $ - $ - $ 0.01 $ - $ 0.01 $ - $ - $ -
Net income (loss) per share $ (0.03 ) $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.04 ) $ (0.02 ) $ (0.01 ) $ -
Diluted weighted average common shares outstanding 23,455,654 23,380,437 23,369,727 23,265,939 23,200,975 23,131,570 18,154,762 18,464,000

Table of Contents

Comparison of the Three ~~and Six~~ Months Ended ~~December 31, 2017~~September 30, 2023 and ~~2016~~2022

Results of Operations

	Three Months Ended December 31,
	2017			2016			2017-2016 $ Change			2017-2016 % Change


													Three Months Ended September 30,
													2023		2022		$ Change		% Change

Revenue:
Platforms	$	413,404		$	219,137		$	194,267			88.7	%	$	2,600,192	$	2,019,967	$	580,225	28.7	%
Transactions		6,409,816			5,866,562			543,254			9.3	%		7,460,779		6,664,676		796,103	11.9	%
Total revenue		6,823,220			6,085,699			737,521			12.1	%		10,060,971		8,684,643		1,376,328	15.8	%


Cost of revenue:
Platforms		90,362			45,623			44,739			98.1	%		382,615		230,473		152,142	66.0	%
Transactions		4,996,988			4,664,690			332,298			7.1	%		5,646,791		5,104,922		541,869	10.6	%
Total cost of revenue		5,087,350			4,710,313			377,037			8.0	%		6,029,406		5,335,395		694,011	13.0	%
Gross profit		1,735,870			1,375,386			360,484			26.2	%


Gross profit:
Platforms														2,217,577		1,789,494		428,083	23.9	%
Transactions														1,813,988		1,559,754		254,234	16.3	%
Total gross profit														4,031,565		3,349,248		682,317	20.4	%

Operating expenses:
Sales and marketing		769,406			854,724			(85,318	)		(10.0	)%		685,016		521,216		163,800	31.4	%
Technology and product development														1,244,579		875,290		369,289	42.2	%
General and administrative		1,308,483			1,226,181			82,302			6.7	%		2,542,868		1,519,424		1,023,444	67.4	%
Depreciation and amortization		46,330			32,426			13,904			42.9	%		59,620		5,812		53,808	925.8	%
Stock-based compensation expense		314,565			303,097			11,468			3.8	%		591,814		175,361		416,453	237.5	%
Foreign currency transaction loss (gain)		(485	)		17,631			(18,116	)		(102.8	)%		6,620		72,516		(65,896)	(90.9)	%
Total operating expenses		2,438,299			2,434,059			4,240			0.2	%		5,130,517		3,169,619		1,960,898	61.9	%
Loss from operations		(702,429	)		(1,058,673	)		(356,244	)		(33.7	)%

Other income (expenses):
Interest expense		(3,000	)		(3,000	)		-			-	%

Income (loss) from operations														(1,098,952)		179,629		(1,278,581)	(711.8)	%

Other income		11,312			5,424			5,888			108.6	%		140,311		39,069		101,242	259.1	%
Total other income		8,312			2,424			5,888			242.9	%

Loss from operations before provision for income taxes		(694,117	)		(1,056,249	)		362,132			34.3	%

Income (loss) from operations before provision for income taxes														(958,641)		218,698		(1,177,339)	(538.3)	%
Provision for income taxes		(9,816	)		(9,337	)		(479	)		(5.1	)%		(29,402)		(4,133)		(25,269)	(611.4)	%

Loss from continuing operations		(703,933	)		(1,065,586	)		361,653			33.9	%

Discontinued operations:
Income from discontinued operations		-			222,626			(222,626	)		(100.0	)%
Gain from sale of discontinued operations		79,353			-			79,353			-	%
Income from discontinued operations		79,353			222,626			(143,273	)		(64.4	)%

Net loss	$	(624,580	)	$	(842,960	)	$	218,380			25.9	%

Net income (loss)													$	(988,043)	$	214,565		(1,202,608)	(560.5)	%

Table of Contents

Six Months Ended December 31,
2017 2016 2017-2016
$ Change 2017-2016
% Change

Revenue:
Platforms $ 801,349 $ 391,209 $ 410,140 104.8 %
Transactions 12,769,711 11,872,961 896,750 7.6 %
Total revenue 13,571,060 12,264,170 1,306,890 10.7 %

Cost of revenue:
Platforms 174,349 75,587 98,762 130.7 %
Transactions 9,911,402 9,379,689 531,713 5.7 %
Total cost of revenue 10,085,751 9,455,276 630,475 6.7 %
Gross profit 3,485,309 2,808,894 676,415 24.1 %

Operating expenses:
Sales and marketing 1,669,101 1,435,502 233,599 16.3 %
General and administrative 2,671,969 2,437,189 234,780 9.6 %
Depreciation and amortization 86,898 62,895 24,003 38.2 %
Stock-based compensation expense 600,807 405,686 195,121 48.1 %
Foreign currency transaction loss (gain) (12,872 ) 20,955 (33,827 ) (161.4 )%
Total operating expenses 5,015,903 4,362,227 653,676 15.0 %
Loss from operations (1,530,594 ) (1,553,333 ) 22,739 1.5 %

Other income (expenses):
Interest expense (6,000 ) (6,000 ) - - %
Other income 24,114 10,134 13,980 138.0 %
Total other income 18,114 4,134 13,980 338.2 %

Loss from operations before provision for income taxes (1,512,480 ) (1,549,199 ) 36,719 2.4 %
Provision for income taxes (21,567 ) (22,942 ) 1,375 6.0 %

Loss from continuing operations (1,534,047 ) (1,572,141 ) 38,094 2.4 %

Discontinued operations:
Income from discontinued operations - 318,515 (318,515 ) (100.0 )%
Gain from sale of discontinued operations 136,502 - 136,502 - %
Income from discontinued operations 136,502 318,515 (182,013 ) (57.1 )%

Net loss $ (1,397,545 ) $ (1,253,626 ) $ (143,919 ) (11.5 )%

Revenue

~~Revenue~~

					��
	Three Months Ended September 30,
	2023		2022			$ Change		% Change
Revenue:
Platforms	$	2,600,192	$	2,019,967		$	580,225	28.7	%
Transactions		7,460,779		6,664,676			796,103	11.9	%
Total revenue	$	10,060,971	$	8,684,643		$	1,376,328	15.8	%

Three Months Ended December 31,
2017 2016 2017-2016
$ Change 2017-2016
% Change
Revenue:
Platforms $ 413,404 $ 219,137 $ 194,267 88.7 %
Transactions 6,409,816 5,866,562 543,254 9.3 %
Total revenue $ 6,823,220 $ 6,085,699 $ 737,521 12.1 %

Total revenue increased ~~$737,521,~~$1,376,328, or ~~12.1%~~15.8%, for the three months ended ~~December 31, 2017~~September 30, 2023 compared to the prior year, due to the following:

Category

Impact

Key Drivers

Impact

Key Drivers

Platforms

194,267

Increased due to additional deployments to new and existing customers. 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.

↑

580,225

Increased due to additional deployments to new and existing customers, expansion from existing customers and additional sales from the ResoluteAI transaction. 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

543,254

Increased primarily due to orders from new customers.

↑

796,103

Increased primarily due to organic higher paid order volume, including additional paid order volume due to the FIZ asset acquisition.

~~Total revenue increased $1,306,890, or 10.7%, for the six months ended December 31, 2017 compared to the prior year, due to the following:~~

Category Impact Key Drivers
Platforms $ 410,140 Increased due to additional deployments to new and existing customers. 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 $ 896,750 Increased primarily due to orders from new customers.

Cost of Revenue

	Three Months Ended December 31,
	2017		2016		2017-2016 $ Change		2017-2016 % Change

										Three Months Ended September 30,
										2023		2022		$ Change		% Change
Cost of Revenue:
Platforms	$	90,362	$	45,623	$	44,739		98.1	%	$	382,615	$	230,473	$	152,142	66.0	%
Transactions		4,996,988		4,664,690		332,298		7.1	%		5,646,791		5,104,922		541,869	10.6	%
Total cost of revenue	$	5,087,350	$	4,710,313	$	377,037		8.0	%	$	6,029,406	$	5,335,395	$	694,011	13.0	%

Three Months Ended December 31,
2017 2016 2017-2016
Change *
As a percentage of revenue:
Platforms 21.9 % 20.8 % 1.1 %
Transactions 78.0 % 79.5 % (1.5 )%
Total 74.6 % 77.4 % (2.8 )%


	Three Months Ended
	September 30,
	2023		2022		% Change *
As a percentage of revenue:
Platforms	14.7	%	11.4	%	3.3	%
Transactions	75.7	%	76.6	%	(0.9)	%
Total	59.9	%	61.4	%	(1.5)	%

* ~~The difference between current and prior period cost of revenue as a percentage of revenue~~

The difference between current and prior period cost of revenue as a percentage of revenue

Total cost of revenue as a percentage of revenue decreased ~~2.8%~~1.5%, from ~~77.4%~~61.4% for the previous year to ~~74.6%~~59.9%, for the three months ended ~~December 31, 2017.~~September 30, 2023.

~~Category~~
		Impact as percentage ~~of revenue~~				~~Key Drivers~~
~~Platforms~~ Category		of revenue			~~1.1~~ Key Drivers
Platforms	%	↑	3.3	%	Increased primarily due to ~~additional third-party data costs.~~proportionally greater hosting costs from ResoluteAI.
Transactions		↓	~~1.5~~ 0.9	%		Decreased primarily due to ~~an increase in copyright discounts.~~proportionally lower personnel costs.

Six Months Ended December 31,
2017 2016 2017-2016
$ Change 2017-2016
% Change
Cost of Revenue:
Platforms $ 174,349 $ 75,587 $ 98,762 130.7 %
Transactions 9,911,402 9,379,689 531,713 5.7 %
Total cost of revenue $ 10,085,751 $ 9,455,276 $ 630,475 6.7 %

Six Months Ended December 31,
2017 2016 2017-2016
Change *
As a percentage of revenue:
Platforms 21.8 % 19.3 % 2.5 %
Transactions 77.6 % 79.0 % (1.4 )%
Total 74.3 % 77.1 % (2.8 )%

* The difference between current and prior period cost

Table of ~~revenue~~Contents

Gross Profit


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
Gross Profit:
Platforms	$	2,217,577	$	1,789,494	$	428,083	23.9	%
Transactions		1,813,988		1,559,754		254,234	16.3	%
Total gross profit	$	4,031,565	$	3,349,248	$	682,317	20.4	%


	Three Months Ended
	September 30,
	2023		2022		% Change*
As a percentage of revenue:
Platforms	85.3	%	88.6	%	(3.3)	%
Transactions	24.3	%	23.4	%	0.9	%
Total	40.1	%	38.6	%	1.5	%

The difference between current and prior period gross profit as a percentage of revenue

~~Total cost of revenue as a percentage of revenue decreased 2.8%, from 77.1% for the previous year to 74.3%, for the six months ended December 31, 2017.~~

~~Category~~	~~Impact as percentage~~ ~~of revenue~~			~~Key Drivers~~
~~Platforms~~		~~2.5~~	%	~~Increased due to additional third-party data costs.~~
~~Transactions~~		~~1.4~~	%	~~Decreased primarily due to an increase in copyright discounts.~~

~~Gross Profit~~

Three Months Ended December 31,
2017 2016 2017-2016
$ Change 2017-2016
% Change
Gross Profit:
Platforms $ 323,042 $ 173,514 $ 149,528 86.2 %
Transactions 1,412,828 1,201,872 210,956 17.6 %
Total gross profit $ 1,735,870 $ 1,375,386 $ 360,484 26.2 %

Three Months Ended December 31,
2017 2016 2017-2016
Change *
As a percentage of revenue:
Platforms 78.1 % 79.2 % (1.1 )%
Transactions 22.0 % 20.5 % 1.5 %
Total 25.4 % 22.6 % 2.8 %

* The difference between current and prior period gross profit as a percentage of revenue

Six Months Ended December 31,
2017 2016
2017-2016
$ Change

2017-2016
% Change

Gross Profit:
Platforms $ 627,000 $ 315,622 $ 311,378 98.7 %
Transactions 2,858,309 2,493,272 365,037 14.6 %
Total gross profit $ 3,485,309 $ 2,808,894 $ 676,415 24.1 %

Six Months Ended December 31,
2017 2016
2017-2016
Change *

As a percentage of revenue:
Platforms 78.2 % 80.7 % (2.5 )%
Transactions 22.4 % 21.0 % 1.4 %
Total 25.7 % 22.9 % 2.8 %

* The difference between current and prior period gross profit as a percentage of revenue

Operating Expenses

	Three Months Ended December 31,
	2017			2016		2017-2016 $ Change			2017-2016 % Change

												Three Months Ended September 30,
												2023		2022		$ Change		% Change
Operating Expenses:
Sales and marketing	$	769,406		$	854,724	$	(85,318	)		(10.0	)%	$	685,016	$	521,216	$	163,800	31.4	%
Technology and product development													1,244,579		875,290		369,289	42.2	%
General and administrative		1,308,483			1,226,181		82,302			6.7	%		2,542,868		1,519,424		1,023,444	67.4	%
Depreciation and amortization		46,330			32,426		13,904			42.9	%		59,620		5,812		53,808	925.8	%
Stock-based compensation expense		314,565			303,097		11,468			3.8	%		591,814		175,361		416,453	237.5	%
Foreign currency transaction loss (gain)		(485	)		17,631		(18,116	)		(102.8	)%
Foreign currency transaction loss													6,620		72,516		(65,896)	(90.9)	%
Total operating expenses	$	2,438,299		$	2,434,059	$	4,240			0.2	%	$	5,130,517	$	3,169,619	$	1,960,898	61.9	%


Category	Impact			Key Drivers
Sales and marketing	↑	$	163,800	Increased primarily due to greater personnel costs and marketing discretionary spend partially offset by lower consulting expenses.
Technology and product development	↑	$	369,289	Increased due to greater software development personnel costs, primarily from the onboarding personnel from ResoluteAI, partially offset by lower consulting expenses.
General and administrative	↑	$	1,023,444	Increased due to greater legal expenses and personnel costs partially offset by lower consulting expenses. Greater legal expenses include proxy-related and acquisition-related costs. Greater personnel costs include separation costs paid to a former officer as result of the resolution of the proxy matter.

Category Impact Key Drivers
Sales and marketing $ 85,318 Decreased primarily due to lower sales commissions.
General and administrative $ 82,302 Increased primarily due to greater personnel and consulting cost.
Depreciation and amortization $ 13,904 Increased due to greater amortization of customer list.

Six Months Ended December 31,
2017 2016
2017-2016
$ Change

2017-2016
% Change

Operating Expenses:
Sales and marketing $ 1,669,101 $ 1,435,502 $ 233,599 16.3 %
General and administrative 2,671,969 2,437,189 234,780 9.6 %
Depreciation and amortization 86,898 62,895 24,003 38.2 %
Stock-based compensation expense 600,807 405,686 195,121 48.1 %
Foreign currency transaction loss (gain) (12,872 ) 20,955 (33,827 ) (161.4 )%
Total operating expenses $ 5,015,903 $ 4,362,227 $ 653,676 15.0 %

Category Impact Key Drivers
Sales and marketing $ 233,599 Increased primarily due to greater personnel and consulting cost.
General and administrative $ 234,780 Increased primarily due to greater personnel and consulting cost.
Depreciation and amortization $ 24,003 Increased due to greater amortization of customer list.

Net Income (Loss)

Three Months Ended December 31,
2017 2016
2017-2016
$ Change

2017-2016
% Change

Net Income (Loss):
Loss from continuing operations $ (703,933 ) $ (1,065,586 ) $ 361,653 33.9 %
Income from discontinued operations 79,353 222,626 (143,273 ) (64.4 )%
Total net loss $ (624,580 ) $ (842,960 ) $ 218,380 25.9 %


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
Net Income (Loss):
Net income (loss):	$	(988,043)	$	214,565	$	(1,202,608)	(560.5)	%

~~Loss from continuing operations~~Net income decreased ~~$361,653~~$1,202,608 or ~~33.9%~~560.5%, for the three months ended ~~December 31, 2017~~September 30, 2023 compared to the prior year, primarily due to increased ~~gross profit,~~operating expenses, partially offset by increased ~~operating expenses~~gross profit as described above.

Six Months Ended December 31,
2017 2016
2017-2016
$ Change

2017-2016
% Change

Net Income (Loss):
Loss from continuing operations $ (1,534,047 ) $ (1,572,141 ) $ 38,094 2.4 %
Income from discontinued operations 136,502 318,515 (182,013 ) (57.1 )%
Total net loss $ (1,397,545 ) $ (1,253,626 ) $ (143,919 ) (11.5 )%

Table of Contents

Loss from continuing operations decreased $38,094 or 2.4%, for the six months ended December 31, 2017 compared to the prior year, primarily due to increased gross profit, partially offset by increased operating expenses as described above.

Liquidity and Capital Resources

Six Months Ended December 31,
Consolidated Statements of Cash Flow Data: 2017 2016
Net cash provided by (used in) operating activities $ (690,161 ) $ 776,562
Net cash used in investing activities (43,536 ) (25,842 )
Net cash used in financing activities (102,955 ) (82,354 )

Effect of exchange rate changes (12,678 ) 3,386
Net increase in cash and cash equivalents (849,330 ) 671,752
Cash and cash equivalents, beginning of period 5,773,950 6,076,875
Cash and cash equivalents, end of period $ 4,924,620 $ 6,748,627
21
~~Liquidity~~

Three Months Ended September 30,

2023

2022
Consolidated Statements of Cash Flow Data:

Net cash provided by (used in) operating activities

$
(755,571)

$
108,879
Net cash used in investing activities

(2,752,078)

(301,131)
Net cash provided by (used in) financing activities

(156,325)

(18,062)

Effect of exchange rate changes

705

(5,172)
Net decrease in cash and cash equivalents

(3,663,269)

(215,486)
Cash and cash equivalents, beginning of period

13,545,333

10,603,175
Cash and cash equivalents, end of period

$
9,882,064

$
10,387,689

Since our inception, we have funded our operations primarily through private sales of equity securities and the exercise of warrants, which have provided aggregate net cash proceeds to date of approximately $15,972,000. As of December 31, 2017, we had working capital of $3,240,308 and stockholders’ equity of $3,429,265. For the six months ended December 31, 2017, we recorded a net loss of $1,397,545, and cash used in operating activities was $690,161. We may incur losses for an indeterminate period and may never sustain profitability. We may be unable to achieve and maintain profitability on a quarterly or annual basis. An extended period of losses and negative cash flow may prevent us from successfully operating and expanding our business.
Liquidity
As of ~~December 31, 2017,~~September 30, 2023, we had cash and cash equivalents of ~~$4,924,620,~~$9,882,064, compared to ~~$5,773,950~~$13,545,333 as of ~~December 31, 2016,~~June 30, 2023, a decrease of ~~$849,330.~~$3,663,269. This decrease was primarily due to cash used in ~~operating~~investing activities.
Operating Activities
Net cash used in operating activities was ~~$690,161~~$755,571 for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2023 and resulted primarily from a decrease in deferred revenue of $646,830 and an increase in accounts receivable of $112,965.
Net cash provided by operating activities was $108,879 for the three months ended September 30, 2022 and resulted primarily from a decrease in prepaid royalties of $710,640, a net ~~loss~~income of ~~$1,397,545~~$214,565, a decrease of accounts receivable of $81,756 and a decrease of prepaid expenses and other current assets of $70,908, partially offset by a decrease in accounts payable and accrued expenses of ~~$1,389,286, partially offset by a decrease in accounts receivable of $1,726,200.~~$1,037,057.

Net cash provided by operating activities was $776,562 for the six months ended December 31, 2016 and resulted primarily from an increase in accounts payable of $1,449,375 and a decrease in accounts receivable of $696,302, partially offset by a net loss of $1,253,626 and an increase in prepaid royalties of $1,044,250.
Investing Activities
Net cash used in investing activities was ~~$43,536~~$2,752,078 for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2023 and resulted primarily from the ~~purchase~~payment for the ResoulteAI acquisition of ~~intangible assets and property and equipment.~~
$2,718,253.
Net cash used in investing activities was ~~$25,842~~$301,131 for the ~~six~~three months ended ~~December 31, 2016~~September 30, 2022 and resulted primarily from the ~~purchase~~payment for non-refundable deposit for the FIZ asset acquisition of ~~intangible assets and property and equipment.~~$297,450.
Financing Activities
Net cash used in financing activities was ~~$102,955~~$156,325 for the ~~six~~three months ended ~~December 31, 2017~~September 30, 2023 and resulted from the payment of contingent acquisition consideration of $110,190 and the repurchase of common ~~stock.~~stock of $74,556.

Net cash used in financing activities was ~~$82,354~~$18,062 for the ~~six~~three months ended ~~December 31, 2016~~September 30, 2022 and resulted from the repurchase of common ~~stock.~~stock of $18,062.

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 ~~December 31, 2019,~~February 28, 2024, and is subject to certain financial and performance covenants with which we were in compliance as of ~~December 31, 2017.~~September 30, 2023. Financial covenants include maintaining an adjusted quick ratio of unrestricted cash and net accounts receivable, divided by current liabilities plus debt less deferred revenue of at least 1.15 to 1.0, and maintaining tangible net worth of $1,500,000, plus 50% of net income for the fiscal quarter ended from and after December 31, 2017, plus 50% of the dollar value of equity issuances after October 1, 2017 and the principal amount of subordinated debt.1.0. The line of credit bears interest at an annual rate equal to the greater of 1% above the prime rate ~~plus 2.25% for periods in which we maintain an adjusted quick ratio of 1.3 to 1.0 (the “Streamline Period”),~~ and ~~at the prime rate plus 5.25% when a Streamline Period is not in effect.~~5.0%. The interest rate on the line of credit was ~~6.75%~~9.5% as of ~~December 31, 2017.~~September 30, 2023. The line of credit was secured by our consolidated assets.

Table of Contents

There were no outstanding borrowings under the line as of ~~December 31, 2017~~September 30, 2023 and June 30, ~~2017,~~2023, respectively. As of ~~December 31, 2017,~~September 30, 2023, there was approximately ~~$2,490,000~~$2,355,000 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.

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 September 30, 2023, we held cash at Bank of America, N.A. of $1,516,191 and at PNC Bank, N.A. of $3,496,791.

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 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.

Non-GAAP Measure – Adjusted EBITDA

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.

Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the three ~~and six~~ months ended ~~December 31, 2017~~September 30, 2023 and ~~2016:~~2022:

	Three Months Ended December 31,
	2017			2016			2017-2016 $ Change
Net loss	$	(624,580	)	$	(842,960	)	$	218,380

										Three Months Ended
										September 30,
										2023		2022		$ Change
Net income (loss)										$	(988,043)	$	214,565	$	(1,202,608)
Add (deduct):
Interest expense		3,000			3,000			-
Other (income) expense		(11,312	)		(5,424	)		(5,888	)		(140,311)		(39,069)		(101,242)
Foreign currency transaction loss (gain)		(485	)		17,631			(18,116	)		6,620		72,516		(65,896)
Provision for income taxes		9,816			9,337			479			29,402		4,133		25,269
Depreciation and amortization		46,330			32,426			13,904			59,620		5,812		53,808
Stock-based compensation		314,565			303,097			11,468			591,814		175,361		416,453
Income from discontinued operations		-			(222,626	)		222,626
Gain on sale of discontinued operations		(79,353	)		-			(79,353	)
Adjusted EBITDA	$	(342,019	)	$	(705,519	)	$	363,500		$	(440,898)	$	433,318	$	(874,216)

Six Months Ended December 31,
2017 2016
2017-2016
$ Change

Net loss $ (1,397,545 ) $ (1,253,626 ) $ (143,919 )
Add (deduct):
Interest expense 6,000 6,000 -
Other (income) expense (24,114 ) (10,134 ) (13,980 )
Foreign currency transaction loss (gain) (12,872 ) 20,955 (33,827 )
Provision for income taxes 21,567 22,942 (1,375 )
Depreciation and amortization 86,898 62,895 24,003
Stock-based compensation 600,807 405,686 195,121
Income from discontinued operations - (318,515 ) 318,515
Gain on sale of discontinued operations (136,502 ) - (136,502 )
Adjusted EBITDA $ (855,761 ) $ (1,063,797 ) $ 208,036

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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:

·●

Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

·●

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

·●

Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; and

·●

~~although~~Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required.

23
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. For purposes of this section, the termdisclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the ~~issuer's~~issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~December 31, 2017,~~September 30, 2023, the end of the period covered by this report, our disclosure controls and procedures were effective at a reasonable assurance level.
Inherent Limitations on the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered

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relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial Reporting

In addition, our management with the participation of our principal executive officer and principal financial officer have determined that no change in our internal control over financial reporting (as that term is defined in Rules 13(a)-15(f) and 15(d)-15(f) of the Exchange Act) occurred during the quarter ended ~~December 31, 2017~~September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION
Item 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
OnEffective as of February ~~16, 2017,~~9, 2021, the Compensation Committee of our Board of Directors authorized the repurchase, ~~over a 12-month period~~during calendar year 2021 on the last day of each trading window and otherwise in accordance with our insider trading policies, of up to ~~$300,000~~$400,000 of outstanding common stock (at prices no greater than ~~$2.00~~$4.00 per share) from our employees to satisfy their tax obligations in connection with the vesting of stock incentive awards. The Compensation Committee of our Board of Directors subsequently approved the extension of the repurchases under the same terms through the end of fiscal year 2024. 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 three months ended ~~December 31, 2017,~~September 30, 2023, we repurchased ~~52,300~~18,603 shares of our common stock ~~under the repurchase plan~~from employees at an average market price of approximately ~~$1.21~~$2.48 per share for an aggregate amount of ~~$63,283.~~$46,135. As of ~~December 31, 2017, $80,070~~September 30, 2023, $104,960 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.
24
30

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The following table summarizes repurchases of our common stock on a monthly basis:

Period Total Number
of Shares
Purchased¹ Average
Price Paid
per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the
Plans or Programs
October 1 - October 31, 2017 - - - $ 143,353
November 1 - November 30, 2017 - - - $ 143,353
December 1 - December 31, 2017 52,300 $ 1.21 - $ 80,070
Total 52,300 $ 1.21 - -






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

Purchased¹

per Share

Plans or Programs

Plans or Programs
July 1-31, 2023

—

—

—

$
151,095
August 1-31, 2023

—

—

—

$
151,095
September 1-30, 2023

18,603

$
2.48

—

$
104,960
Total

18,603

$
2.48

—

—
¹ Consists of shares of common stock purchased from an employee to satisfy tax obligations in connection with the vesting of stock incentive awards.

Item 6. Exhibits
EXHIBIT INDEX
~~See “Exhibit Index” on the page immediately following the signature page hereto for a list of exhibits filed as part of this report, which is incorporated herein by reference.~~
Exhibit
Number
25
Description
2.1
Agreement and Plan of Merger by and among Reprints Desk, Inc., Research Solutions Acquisition Corp 1, Research Solutions, Inc., as Parent Guarantor, Resolute Innovation, Inc. and Shareholder Representative Services LLC dated as of July 28, 2023. (Incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed on July 31, 2023.)
3.1.1
Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form SB-2 filed on December 28, 2007.)
3.1.2
Articles of Merger Effective March 4, 2013. (Incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on March 6, 2013.)
3.2
Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed on October 17, 2012.)
10.1
Cooperation Agreement, dated as of September 15, 2023, by and among Research Solutions, Inc., Peter Derycz, Bristol Investment Fund, Ltd., Bristol Capital Advisors, LLC and Paul Kessler. (Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on September 20, 2023.)
31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer *
32.2
Section 1350 Certification of Chief Financial Officer *
101.INS
INLINE XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

*      Furnished herewith

31

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SIGNATURES
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 thereunto duly authorized.

RESEARCH SOLUTIONS, INC.
By:
/s/ ~~Peter Victor Derycz~~Roy W. Olivier
~~Peter Victor Derycz~~
Roy W. Olivier
Date: ~~February~~November 14, ~~2018~~2023
Chief Executive Officer and President (Principal Executive Officer)
By:
/s/ ~~Alan Louis Urban~~William Nurthen
~~Alan Louis Urban~~
William Nurthen
Date: ~~February~~November 14, ~~2018~~2023
Chief Financial Officer (Principal Financial and Accounting Officer)

26

32
~~EXHIBIT INDEX~~
~~Exhibit~~
~~Number~~ ~~Description~~
~~10.1~~ ~~Amended and Restated Loan and Security Agreement dated October 31, 2017, between Silicon Valley Bank and Research Solutions, Inc.~~
~~31.1~~ ~~Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer~~
~~31.2~~ ~~Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer~~
~~32.1~~ Section 1350 Certification of Chief Executive Officer *
~~32.2~~ Section 1350 Certification of Chief Financial Officer *
~~101.INS~~ ~~XBRL Instance Document~~
~~101.SCH~~ ~~XBRL Taxonomy Extension Schema~~
~~101.CAL~~ ~~XBRL Taxonomy Extension Calculation Linkbase~~
~~101.DEF~~ ~~XBRL Taxonomy Extension Definition Linkbase~~
~~101.LAB~~ ~~XBRL Taxonomy Extension Label Linkbase~~
~~101.PRE~~ ~~XBRL Taxonomy Extension Presentation Linkbase~~
* ~~Furnished herewith~~

PART I — FINANCIAL INFORMATION		3
Item 1. Condensed Consolidated Financial Statements (unaudited)		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		23 29
Item 4. Controls and Procedures		24 29

PART II — OTHER INFORMATION		24 30
Item 1A. Risk Factors	30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		24 30
Item 6. Exhibits		25 31

SIGNATURES		26 32

	December 31,			June 30,
	2017			2017
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	4,924,620		$	5,773,950
Accounts receivable, net of allowance of $119,462 and $119,536, respectively		3,739,099			5,465,299
Prepaid expenses and other current assets		315,906			196,820
Prepaid royalties		736,145			566,282
Total current assets		9,715,770			12,002,351

Other assets:
Property and equipment, net of accumulated depreciation of $728,271 and $699,421, respectively		81,340			85,737
Intangible assets, net of accumulated amortization of $679,836 and $623,714, respectively		-			41,870
Deposits and other assets		14,383			14,466
Right of use asset, net of accumulated amortization of $99,864 and $45,105, respectively		363,158			417,917
Total assets	$	10,174,651		$	12,562,341

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	5,053,770		$	6,443,056
Deferred revenue		1,306,429			1,335,475
Lease liability, current portion		115,263			110,888
Total current liabilities		6,475,462			7,889,419

Long-term liabilities:
Lease liability, long-term portion		269,924			328,299
Total liabilities		6,745,386			8,217,718

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; 24,147,582 and 23,883,145 shares issued and outstanding, respectively		24,148			23,883
Additional paid-in capital		22,764,915			22,267,327
Accumulated deficit		(19,273,403	)		(17,875,858	)
Accumulated other comprehensive loss		(86,395	)		(70,729	)
Total stockholders’ equity		3,429,265			4,344,623
Total liabilities and stockholders’ equity	$	10,174,651		$	12,562,341

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2017			2016			2017			2016

Revenue:
Platforms	$	413,404		$	219,137		$	801,349		$	391,209
Transactions		6,409,816			5,866,562			12,769,711			11,872,961
Total revenue		6,823,220			6,085,699			13,571,060			12,264,170

Cost of revenue:
Platforms		90,362			45,623			174,349			75,587
Transactions		4,996,988			4,664,690			9,911,402			9,379,689
Total cost of revenue		5,087,350			4,710,313			10,085,751			9,455,276
Gross profit		1,735,870			1,375,386			3,485,309			2,808,894

Operating expenses:
Selling, general and administrative		2,391,969			2,401,633			4,929,005			4,299,332
Depreciation and amortization		46,330			32,426			86,898			62,895
Total operating expenses		2,438,299			2,434,059			5,015,903			4,362,227
Loss from operations		(702,429	)		(1,058,673	)		(1,530,594	)		(1,553,333	)

Other income (expenses):
Interest expense		(3,000	)		(3,000	)		(6,000	)		(6,000	)
Other income		11,312			5,424			24,114			10,134
Total other income		8,312			2,424			18,114			4,134

Loss from operations before provision for income taxes		(694,117	)		(1,056,249	)		(1,512,480	)		(1,549,199	)
Provision for income taxes		(9,816	)		(9,337	)		(21,567	)		(22,942	)

Loss from continuing operations		(703,933	)		(1,065,586	)		(1,534,047	)		(1,572,141	)

Discontinued operations:
Income from discontinued operations		-			222,626			-			318,515
Gain from sale of discontinued operations		79,353			-			136,502			-
Income from discontinued operations		79,353			222,626			136,502			318,515

Net loss		(624,580	)		(842,960	)		(1,397,545	)		(1,253,626	)

Other comprehensive income (loss):
Foreign currency translation		(6,715	)		5,195			(15,666	)		1.912
Comprehensive loss	$	(631,295	)	$	(837,765	)	$	(1,413,211	)	$	(1,251,714	)

Loss per common share:
Loss per share from continuing operations, basic and diluted	$	(0.03	)	$	(0.05	)	$	(0.07	)	$	(0.06	)
Income per share from discontinued operations, basic and diluted	$	-		$	0.01		$	0.01		$	0.01
Net loss per share, basic and diluted	$	(0.03	)	$	(0.04	)	$	(0.06	)	$	(0.05	)
Weighted average common shares outstanding, basic and diluted		23,455,654			23,200,975			23,418,046			23,166,272

	Common Stock						Additional Paid-in			Accumulated			Other Comprehensive			Total Stockholders'
	Shares			Amount			Capital			Deficit			Loss			Equity

Balance, July 1, 2017		23,883,145		$	23,883		$	22,267,327		$	(17,875,858	)	$	(70,729	)	$	4,344,623

Fair value of vested stock options		-			-			389,236			-			-			389,236

Fair value of vested restricted common stock		338,302			339			205,000			-			-			205,339

Repurchase of common stock		(87,100	)		(87	)		(102,868	)		-			-			(102,955	)

Modification cost of stock options		-			-			6,233			-			-			6,233

Common stock issued upon exercise of stock options		13,235			13			(13	)		-			-			-

Net loss for the period		-			-			-			(1,397,545	)		-			(1,397,545	)

Foreign currency translation		-			-			-			-			(15,666	)		(15,666	)

Balance, December 31, 2017		24,147,582		$	24,148		$	22,764,915		$	(19,273,403	)	$	(86,395	)	$	3,429,265

	Number of Warrants		Weighted Average Exercise Price
Outstanding, June 30, 2017		1,985,000		1.25
Granted		-		-
Exercised		-		-
Expired/Cancelled		-		-
Outstanding, December 31, 2017		1,985,000	$	1.25
Exercisable, June 30, 2017		1,985,000	$	1.25
Exercisable, December 31, 2017		1,985,000	$	1.25

Warrant Exercise Price		Warrants Outstanding		Remaining Contractual Life (in years)		Warrants Exercisable
$	1.19		100,000		3.98		100,000
	1.25		1,885,000		3.45		1,885,000
	Total		1,985,000				1,985,000

	Six Months Ended December 31,
	2017			2016			2017-2016 $ Change			2017-2016 % Change

Revenue:
Platforms	$	801,349		$	391,209		$	410,140			104.8	%
Transactions		12,769,711			11,872,961			896,750			7.6	%
Total revenue		13,571,060			12,264,170			1,306,890			10.7	%

Cost of revenue:
Platforms		174,349			75,587			98,762			130.7	%
Transactions		9,911,402			9,379,689			531,713			5.7	%
Total cost of revenue		10,085,751			9,455,276			630,475			6.7	%
Gross profit		3,485,309			2,808,894			676,415			24.1	%

Operating expenses:
Sales and marketing		1,669,101			1,435,502			233,599			16.3	%
General and administrative		2,671,969			2,437,189			234,780			9.6	%
Depreciation and amortization		86,898			62,895			24,003			38.2	%
Stock-based compensation expense		600,807			405,686			195,121			48.1	%
Foreign currency transaction loss (gain)		(12,872	)		20,955			(33,827	)		(161.4	)%
Total operating expenses		5,015,903			4,362,227			653,676			15.0	%
Loss from operations		(1,530,594	)		(1,553,333	)		22,739			1.5	%

Other income (expenses):
Interest expense		(6,000	)		(6,000	)		-			-	%
Other income		24,114			10,134			13,980			138.0	%
Total other income		18,114			4,134			13,980			338.2	%

Loss from operations before provision for income taxes		(1,512,480	)		(1,549,199	)		36,719			2.4	%
Provision for income taxes		(21,567	)		(22,942	)		1,375			6.0	%

Loss from continuing operations		(1,534,047	)		(1,572,141	)		38,094			2.4	%

Discontinued operations:
Income from discontinued operations		-			318,515			(318,515	)		(100.0	)%
Gain from sale of discontinued operations		136,502			-			136,502			-	%
Income from discontinued operations		136,502			318,515			(182,013	)		(57.1	)%

Net loss	$	(1,397,545	)	$	(1,253,626	)	$	(143,919	)		(11.5	)%