Research Solutions, Inc.

Research Solutions, Inc. operates as a vertical software-as-a-service and artificial intelligence company providing software and related services to research-intensive organizations, with a focus on simplifying the research process and reducing costs. The company's platforms are sold to corporate, academic, government, and individual researchers as cloud-based SaaS via auto-renewing license agreements, with corporate customers typically signing annual or multi-year agreements paid annually in advance, while individual researchers can sign up under annual or month-to-month agreements billed monthly. The platforms facilitate the sale of published scientific, technical, and medical content sold as individual articles, either stand alone or through the platforms, and also facilitate rights and permissions for content re-use, including for AI applications and training of AI models. The company's platforms enable life science and other research-intensive organizations to simplify research and development through advanced search tools, access to STM articles, and content management, with additional context from patent, clinical trial, regulatory, and competitive intelligence data. The industry is subject to intense competition and rapid technological change, including from artificial intelligence, and the company faces competition from reference management applications, piracy, STM single article delivery vendors and content aggregators, customer in-house services, and publisher in-house capabilities.

The company believes it possesses competitive strengths including proprietary software, a sophisticated information logistics technology backbone, and Internet-based interfaces that allow customers to initiate orders, manage transactions, obtain reporting, automate authentication, and connect to in-house and third-party systems. The company has ranked first overall and in every category for customer satisfaction and loyalty in Document Delivery Buyer Surveys conducted by Outsell, Inc., reflecting a gross churn rate in the low single digit range and a net churn rate in the high single digit range, each as a percentage of revenue. The company has arrangements with hundreds of content publishers, though these relationships are non-exclusive, and the aggregate number of in-place agreements is essential to its value proposition and market presence. Primary competitors include Copyright Clearance Center, regional interlibrary loan networks such as those owned and operated by OCLC, and numerous national libraries outside the United States, as well as reference management applications and piracy, which the company identifies as perhaps its most serious competitor.

The company generates revenue from two sources: annual licenses for access to premium features of its cloud-based SaaS research intelligence platforms, recognized ratably over the subscription term, and the transactional sale of STM content, recognized upon delivery. Platform revenue is derived from subscription fees, while transaction revenue includes a service fee for electronic delivery of single articles and a corresponding copyright fee for permitted use. The company's primary customer segments are life science companies, academic institutions, and other research-intensive organizations, with a focus on pharmaceutical, biotechnology, and medical device customers, while also penetrating academic, aerospace, automotive, electronics, chemicals, and food and agriculture markets. The platforms are deployed as a single, multi-tenant system across the entire customer base, with customers accessing them through online web interfaces and web service APIs, and the company leverages efficiencies in scalability, stability, and development costs to fuel rapid innovation and competitive advantage.

The company's Platforms are divided into three legacy functional areas: Discovery Tools, Access, and Manage. Discovery Tools, including Scite.ai and Resolute.ai, facilitate search across virtually all STM articles, with Scite.ai offering full text search capability on most of the world's STM content and providing citation information as supporting or contrasting evidence, powering an AI assistant and literature search engine. Access solutions, including Article Galaxy and Article Galaxy Scholar, allow research organizations to load their entitlements and manage them in the background, enabling researchers to acquire articles at the lowest possible cost, with capabilities for initiating orders, routing orders based on lowest cost, spend and usage reporting, and automated authentication. Manage, the References solution, offers a comprehensive reference management solution with built-in document delivery capabilities, enabling researchers to organize literature, collaborate with team members, and access a vast collection of scientific content. The platforms also include generative AI-based assistants that allow researchers to ask questions about articles and groups of articles, with the ability to provide near full text search on STM content where the publisher grants rights, and the company employs generative AI technologies as a basis for its recommendation engine across Discovery Tools, Access, and Manage solutions.

The company's Transactions business provides a single source to the universe of published STM content, including over 200 million existing STM journal articles for instant download, 50 million journal articles for rent, 10 million online book chapters, and 45 million only in print journal articles, with between 2 to 4 million newly published STM articles added each year. STM content is rented or sold on a per transaction basis, with customers submitting orders that are sourced and electronically delivered generally in under an hour, in most cases in seconds. The company obtains necessary permission licenses from content publishers or other rights holders to ensure copyright compliance, and is expanding these services to include the use of content in AI applications and for the training of AI models. The company has arrangements with hundreds of content publishers, with the majority providing electronic access to their content, and also has workflows to deliver older paper-based articles through relationships with libraries around the world.

During the fiscal year, the company repurchased 17,800 shares of its common stock from employees at an average market price of approximately $2.98 per share for an aggregate amount of $53,039, with $109,277 remaining under the current authorization as of June 30, 2026. The company also had a line of credit with PNC Bank, National Association, maturing on April 15, 2027, under which there were no outstanding borrowings as of June 30, 2026. The company acquired 100% of the outstanding stock of Resolute Innovation, Inc. on July 28, 2023, and 100% of the outstanding stock of Scite, Inc. on December 1, 2023, with the Scite acquisition completed through a merger of a subsidiary. The company operates in a virtual environment and does not have a physical office space or headquarters, and as of September 4, 2026, had 141 full-time employees.

Total revenue for the fiscal year ended June 30, 2026 was $48,306,957, a decrease of $751,024 or 1.5% compared to $49,057,981 in the prior year, driven by a 9.8% increase in Platform revenue to $20,820,974 and an 8.7% decrease in Transactions revenue to $27,485,983. Net income was $2,822,068 for fiscal 2026, compared to $1,265,553 in fiscal 2025, an increase of 123.0%. Total gross profit increased 3.6% to $25,070,508, with Platform gross profit of $18,211,553 and Transactions gross profit of $6,858,955. Income from operations increased 43.5% to $3,588,377, and the company had an accumulated deficit of $22,221,625 as of June 30, 2026.

The company's growth strategy focuses on organic growth through targeted direct and channel promotions of its platforms to potential customers, supported by inbound marketing driven by educational content, innovative technological systems, competitive pricing, and best-in-class service. The company is positioning its sales force to better serve small and medium-sized businesses that it considers largely underserved today, and seeks to grow existing customer revenue through year-over-year pricing increases and value-based add-ons. The company also submits proposals in response to requests for proposals and anticipates growth from cross-selling into its existing customer base, penetrating new market verticals, and generating market demand and preference from both existing and new customers. The company intends to continue investing in its platforms and integrations with third-party AI applications through new product enhancements and expanded dataset coverage, with a focus on product differentiation and development of new products attractive to new and existing customers.

The company's growth strategy includes international expansion, having expanded internationally through increased sales to companies located abroad, particularly in Europe and Japan, and may further expand internationally through partnerships or acquisitions. The company also pursues acquisitions and combinations from time to time, including the acquisition of customer lists, that bring revenue, profitability, growth potential, cross-selling opportunities, and additional technology, products, services, operations, or geographic capabilities. The company regularly contacts publishers to negotiate additional publisher agreements and advances new business opportunities such as rentals through amendments to existing agreements. The company's growth is expected to come from cross-selling into its existing customer base, penetrating new market verticals, and generating market demand and preference from both existing and new customers, with a focus on the life science market while also penetrating academic, aerospace, automotive, electronics, chemicals, and food and agriculture markets.

The company's cost structure is evolving with total cost of revenue as a percentage of revenue decreasing 2.6% from 50.7% in the prior year to 48.1% in fiscal 2026, driven by a decrease in total cost of revenue of $1,625,581 or 6.5%. Platform cost of revenue increased 10.0% to $2,609,421, while Transactions cost of revenue decreased 8.3% to $20,627,028. The company's operating expenses decreased 1.0% to $21,482,131, with sales and marketing expenses increasing 19.4% to $6,397,899, technology and product development expenses increasing 8.7% to $6,121,647, and general and administrative expenses decreasing 15.3% to $6,724,399. The company recorded a credit to bad debt expense of approximately $23,000 in fiscal 2026, compared to a bad debt expense of approximately $141,000 in fiscal 2025, and had write-offs of approximately $56,000 and $49,000 in fiscal 2026 and 2025, respectively.

The company operates in a virtual environment and does not have a physical office space or headquarters, and as of September 4, 2026, had 141 full-time employees. The company's technology infrastructure investments are focused on its cloud-based SaaS platforms, which are deployed as a single, multi-tenant system across its entire customer base, with customers accessing the platforms through online web interfaces and web service APIs. The company's software development costs are expensed as incurred, and it continuously reviews its projects and processes to determine if changes would meet the requirements for capitalization under ASC 350-40. The company's human capital resources include 141 full-time employees as of September 4, 2026, and it relies on its senior management team for its substantial experience with its diverse service offerings and business strategies.

The company's capital allocation strategy includes share repurchases, with the Compensation Committee authorizing a repurchase cap of $750,000 effective March 19, 2024, later increased to $1,500,000 effective December 19, 2024, with a repurchase price cap of $5.50 per share. During fiscal 2026, the company repurchased 17,800 shares at an average market price of approximately $2.98 per share for an aggregate amount of $53,039, and as of June 30, 2026, $109,277 remained under the current authorization. The company has never declared or paid dividends on its common stock and does not anticipate paying dividends in the foreseeable future, with its loan agreement with PNC prohibiting cash dividends on or after an event of default. The company's line of credit with PNC matures on April 15, 2027, with no outstanding borrowings as of June 30, 2026.

The company faces structural headwinds including intense competition and rapid technological change, particularly from artificial intelligence, which may result in products or new solutions that are superior to its own. The company may fail to effectively invest in technology or may invest in technologies that do not assist in achieving strategic goals, and the failure to continue investing could result in a material adverse effect on future financial results. The company also faces risks from increased accessibility of free or relatively inexpensive information sources, which may reduce demand for its products and services, and from the potential for its customers to use public sources as substitutes. The company's growth strategy may require significant additional resources, and such resources might not be available on terms acceptable to the company, if at all, which may hamper growth and adversely affect the business.

The company is exposed to risks related to its foreign operations, including an operational and administrative support organization in Mexico and sales worldwide, with exposure to local economic and employment conditions, local taxes and employment regulations, political conditions, currency exchange rate fluctuations, reliance on local management, and additional potential costs of complying with rules and regulations of foreign jurisdictions. The company's costs of Reprints Desk Latin America and ResSol LA are in Mexican Pesos, and currency exchange fluctuations may impact revenue and costs, with the company currently not engaging in any currency hedging activities. Unfavorable global economic conditions, including political instability and conflict, bank failures, supply chain interruptions, rising interest rates, and global inflationary pressures, could materially and adversely affect the company's ability to operate as a going concern and its financial condition. The company also faces risks from the failure of any bank in which it deposits funds, which could reduce the amount of cash available for operations or delay access to such funds.

The company's business is subject to significant risks, including its historical reliance on cash from financing activities and significant losses, with an accumulated deficit of $22,221,625 ¹ as of June 30, 2026, and net income of $2,822,068 ² and $1,265,553 ³ for fiscal 2026 and 2025, respectively. The company's content cost concentration is a material risk, with approximately 46% ⁴ and 45% ⁵ of content cost derived from its three largest suppliers for fiscal 2026 and 2025, respectively, and the loss of any of these suppliers would significantly reduce revenue. The company faces intense competition and rapid technological change, particularly from artificial intelligence, which may render its products obsolete, and the rapid evolution of AI requires significant expense to maintain a competitive advantage. The company's growth strategy may require significant additional resources, and if additional financing is not available on acceptable terms, the company may be unable to support growth, with potential dilution to existing stockholders from future equity issuances. The company's loan agreement with PNC contains financial and restrictive covenants, and failure to comply could result in an event of default, with the bank potentially preventing access to the line of credit and foreclosing on substantially all of the company's tangible and intangible assets.

Management's message emphasizes the company's transformation into a vertical SaaS and AI company, with a focus on simplifying the research process for research-intensive organizations. The company's strategic priorities include continuing to invest in its platforms and integrations with third-party AI applications, expanding its customer base through cross-selling and new market verticals, and pursuing strategic acquisitions and combinations. Management highlights the company's competitive strengths, including its proprietary software, customer loyalty reflected in low single digit gross churn and high single digit net churn rates, and its industry presence with arrangements with hundreds of content publishers. The company's forward-looking statements include expectations for growth from cross-selling into its existing customer base, penetrating new market verticals, and generating market demand and preference from both existing and new customers, with a focus on the life science market while also penetrating academic, aerospace, automotive, electronics, chemicals, and food and agriculture markets.