{"url_path":"/sec/rsss/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial Statements**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-09-11","source_url":"https://www.sec.gov/Archives/edgar/data/1386301/0001104659-26-107044-index.html","accession_number":"0001104659-26-107044","cik":"0001386301","ticker":"RSSS","issuer_name":"Research Solutions, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1386301/0001104659-26-107044-index.html","primary_entity_key":"0001386301","primary_entity_name":"Research Solutions, Inc."},"word_count":13026,"has_tables":true,"body_markdown":"**Item 8. Financial Statements**\n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\nTo the Stockholders and Board of Directors\n\nResearch Solutions, Inc. and Subsidiaries\n\nHenderson, Nevada\n\n**Opinion on the Consolidated Financial Statements**\n\nWe have audited the accompanying consolidated balance sheets of Research Solutions, Inc. and Subsidiaries (the “Company”), as of June 30, 2026 and 2025, and the related consolidated statements of operations and comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.\n\n**Basis for Opinion**\n\nThese consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  \n\nOur audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.  Our audits also included evaluating the accounting principles used and the significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.  We believe that our audit provides a reasonable basis for our opinion.  \n\n**Critical Audit Matters**\n\nCritical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there were no critical audit matters.\n\nWe have served as the Company’s auditor since 2024.\n\n​\n\n/s/ Wipfli LLP\n\nRadnor, Pennsylvania\n\nSeptember 11, 2026\n\nPCAOB ID: 344\n\n35\n\n[Table of Contents](#TOC)\n\n​\n\n**Research Solutions, Inc. and Subsidiaries**\n\n**Consolidated Balance Sheets**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**June 30, **\n\n**  ​ ​ ​**\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n​\n\n**2025**\n\n**Assets**\n\n​\n\n  ​\n\n​\n\n​\n\n  ​\n\n​\n\n**Current assets:**\n\n​\n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nCash and cash equivalents\n\n​\n\n$\n\n12,630,283\n\n​\n\n$\n\n12,227,312\n\nAccounts receivable, net of allowance of $103,217 and $182,324, respectively\n\n​\n\n \n\n6,963,040\n\n​\n\n \n\n7,191,234\n\nPrepaid expenses and other current assets\n\n​\n\n \n\n689,548\n\n​\n\n \n\n580,257\n\nPrepaid royalties\n\n​\n\n \n\n411,297\n\n​\n\n \n\n925\n\nTotal current assets\n\n​\n\n \n\n20,694,168\n\n​\n\n \n\n19,999,728\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Non-current assets:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nProperty and equipment, net of accumulated depreciation of $1,020,241 and $964,883, respectively\n\n​\n\n \n\n58,671\n\n​\n\n \n\n60,769\n\nIntangible assets, net of accumulated amortization of $3,947,231 and $2,736,773, respectively\n\n​\n\n​\n\n8,537,870\n\n​\n\n​\n\n9,686,241\n\nGoodwill\n\n​\n\n \n\n16,372,979\n\n​\n\n \n\n16,372,979\n\nDeposits and other assets\n\n​\n\n \n\n1,030\n\n​\n\n \n\n957\n\n**Total assets**\n\n​\n\n$\n\n45,664,718\n\n​\n\n$\n\n46,120,674\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Liabilities and Stockholders’ Equity**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Current liabilities:**\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\nAccounts payable and accrued expenses\n\n​\n\n$\n\n6,149,480\n\n​\n\n$\n\n7,443,757\n\nDeferred revenue, current portion\n\n​\n\n \n\n11,467,832\n\n​\n\n \n\n10,702,120\n\nContingent earnout liability, current portion\n\n​\n\n \n\n7,323,314\n\n​\n\n \n\n7,363,152\n\nTotal current liabilities\n\n​\n\n \n\n24,940,626\n\n​\n\n \n\n25,509,029\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Non-current liabilities:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nDeferred revenue, long-term portion\n\n​\n\n \n\n17,245\n\n​\n\n \n\n—\n\nContingent earnout liability, long-term portion\n\n​\n\n \n\n—\n\n​\n\n \n\n6,683,488\n\n**Total liabilities**\n\n​\n\n \n\n24,957,871\n\n​\n\n \n\n32,192,517\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Commitments and contingencies**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Stockholders’ equity:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nPreferred stock; $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding\n\n​\n\n \n\n—\n\n​\n\n \n\n—\n\nCommon stock; $0.001 par value; 100,000,000 shares authorized; 33,513,551 and 32,479,993 shares issued and outstanding, respectively\n\n​\n\n \n\n33,513\n\n​\n\n \n\n32,480\n\nAdditional paid-in capital\n\n​\n\n \n\n42,998,357\n\n​\n\n \n\n39,059,557\n\nAccumulated deficit\n\n​\n\n \n\n(22,221,625)\n\n​\n\n \n\n(25,043,693)\n\nAccumulated other comprehensive loss\n\n​\n\n \n\n(103,398)\n\n​\n\n \n\n(120,187)\n\nTotal stockholders’ equity\n\n​\n\n \n\n20,706,847\n\n​\n\n \n\n13,928,157\n\n**Total liabilities and stockholders’ equity**\n\n​\n\n$\n\n45,664,718\n\n​\n\n$\n\n46,120,674\n\n​\n\nSee notes to consolidated financial statements\n\n​\n\n36\n\n[Table of Contents](#TOC)\n\n**Research Solutions, Inc. and Subsidiaries**\n\n**Consolidated Statements of Operations and Comprehensive Income**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRevenue:\n\n​\n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nPlatforms\n\n​\n\n$\n\n20,820,974\n\n​\n\n$\n\n18,955,695\n\nTransactions\n\n​\n\n \n\n27,485,983\n\n​\n\n \n\n30,102,286\n\nTotal revenue\n\n​\n\n \n\n48,306,957\n\n​\n\n \n\n49,057,981\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nCost of revenue:\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nPlatforms\n\n​\n\n \n\n2,609,421\n\n​\n\n \n\n2,371,540\n\nTransactions\n\n​\n\n \n\n20,627,028\n\n​\n\n \n\n22,490,490\n\nTotal cost of revenue\n\n​\n\n \n\n23,236,449\n\n​\n\n \n\n24,862,030\n\nGross profit\n\n​\n\n \n\n25,070,508\n\n​\n\n \n\n24,195,951\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Operating expenses:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nSelling, general and administrative\n\n​\n\n \n\n20,227,158\n\n​\n\n \n\n20,449,378\n\nDepreciation and amortization\n\n​\n\n \n\n1,254,973\n\n​\n\n \n\n1,245,362\n\nTotal operating expenses\n\n​\n\n \n\n21,482,131\n\n​\n\n \n\n21,694,740\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nIncome from operations\n\n​\n\n \n\n3,588,377\n\n​\n\n \n\n2,501,211\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nOther income\n\n​\n\n \n\n407,026\n\n​\n\n \n\n595,679\n\nAccreted interest expense\n\n​\n\n​\n\n(1,040,293)\n\n​\n\n​\n\n—\n\nChange in fair value of contingent earnout liability\n\n​\n\n​\n\n—\n\n​\n\n​\n\n(1,748,526)\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nIncome before provision for income taxes\n\n​\n\n \n\n2,955,110\n\n​\n\n \n\n1,348,364\n\nProvision for income taxes\n\n​\n\n \n\n(133,042)\n\n​\n\n \n\n(82,811)\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nNet income\n\n​\n\n \n\n2,822,068\n\n​\n\n \n\n1,265,553\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Other comprehensive income (loss):**\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\nForeign currency translation\n\n​\n\n \n\n16,789\n\n​\n\n \n\n(1,368)\n\nComprehensive income\n\n​\n\n$\n\n2,838,857\n\n​\n\n$\n\n1,264,185\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nBasic income per common share:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nNet income per share\n\n​\n\n$\n\n0.09\n\n​\n\n$\n\n0.04\n\nWeighted average common shares outstanding\n\n​\n\n​\n\n31,788,992\n\n​\n\n​\n\n30,681,187\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nDiluted income per common share:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nNet income per share\n\n​\n\n$\n\n0.09\n\n​\n\n$\n\n0.04\n\nWeighted average common shares outstanding\n\n​\n\n​\n\n32,272,835\n\n​\n\n​\n\n31,503,972\n\n​\n\nSee notes to consolidated financial statements\n\n​\n\n37\n\n[Table of Contents](#TOC)\n\n**Research Solutions, Inc. and Subsidiaries**\n\n**Consolidated Statements of Changes in Stockholders’ Equity**\n\n**For the Years Ended June 30, 2026 and 2025**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Additional**\n\n​\n\n​\n\n​\n\n​\n\n**Other**\n\n​\n\n**Total**\n\n​\n\n​\n\n**Common Stock**\n\n​\n\n**Paid-in**\n\n​\n\n**Accumulated**\n\n​\n\n**Comprehensive**\n\n​\n\n**Stockholders’**\n\n​\n\n**  ​ ​ ​**\n\n**Shares**\n\n**  ​ ​ ​**\n\n**Amount**\n\n**  ​ ​ ​**\n\n**Capital**\n\n**  ​ ​ ​**\n\n**Deficit**\n\n**  ​ ​ ​**\n\n**Loss**\n\n**  ​ ​ ​**\n\n**Equity**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Balance, July 1, 2024**\n\n \n\n32,295,373\n\n \n\n​\n\n32,295\n\n \n\n​\n\n38,089,958\n\n \n\n​\n\n(26,309,246)\n\n \n\n​\n\n(118,819)\n\n \n\n$\n\n11,694,188\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nStock options expense\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n205,457\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n205,457\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nRestricted common stock expense\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n1,518,104\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n1,518,104\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nGrant of restricted common stock\n\n​\n\n590,000\n\n \n\n​\n\n590\n\n​\n\n​\n\n(590)\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nForfeited restricted common stock\n\n​\n\n(318,584)\n\n​\n\n​\n\n(319)\n\n​\n\n​\n\n319\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRepurchase of common stock\n\n​\n\n(310,330)\n\n \n\n​\n\n(310)\n\n \n\n​\n\n(934,267)\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n​\n\n​\n\n(934,577)\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nCommon stock issued upon exercise of stock options\n\n​\n\n223,534\n\n \n\n​\n\n224\n\n​\n\n​\n\n180,576\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n180,800\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n \n\n​\n\n  ​\n\nNet income for the period\n\n \n\n—\n\n \n\n​\n\n—\n\n​\n\n​\n\n—\n\n \n\n​\n\n1,265,553\n\n \n\n​\n\n—\n\n \n\n​\n\n1,265,553\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nForeign currency translation\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n(1,368)\n\n \n\n​\n\n(1,368)\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n**Balance, June 30, 2025**\n\n \n\n32,479,993\n\n \n\n​\n\n32,480\n\n \n\n​\n\n39,059,557\n\n \n\n​\n\n(25,043,693)\n\n \n\n​\n\n(120,187)\n\n \n\n​\n\n13,928,157\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nStock options expense\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n330,374\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n330,374\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nRestricted common stock expense\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n598,142\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n598,142\n\n​\n\n \n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nGrant of restricted common stock\n\n​\n\n205,000\n\n \n\n​\n\n205\n\n​\n\n​\n\n(205)\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nForfeited restricted common stock\n\n​\n\n(436,667)\n\n​\n\n​\n\n(437)\n\n​\n\n​\n\n437\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nRepurchase of common stock\n\n \n\n(17,800)\n\n \n\n​\n\n(17)\n\n \n\n​\n\n(53,022)\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n(53,039)\n\n​\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nCommon stock issued upon exercise of stock options\n\n \n\n250,624\n\n \n\n​\n\n250\n\n​\n\n​\n\n157,250\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n157,500\n\n​\n\n \n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nCommon stock issued for Scite earnout payment\n\n​\n\n1,032,401\n\n​\n\n​\n\n1,032\n\n​\n\n​\n\n2,905,824\n\n​\n\n​\n\n—\n\n​\n\n​\n\n—\n\n​\n\n​\n\n2,906,856\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nNet income for the period\n\n \n\n—\n\n \n\n​\n\n—\n\n​\n\n​\n\n—\n\n \n\n​\n\n2,822,068\n\n \n\n​\n\n—\n\n \n\n​\n\n2,822,068\n\n​\n\n \n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\n  ​\n\nForeign currency translation\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n​\n\n16,789\n\n \n\n​\n\n16,789\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Balance, June 30, 2026**\n\n \n\n33,513,551\n\n​\n\n$\n\n33,513\n\n​\n\n$\n\n42,998,357\n\n​\n\n$\n\n(22,221,625)\n\n​\n\n$\n\n(103,398)\n\n​\n\n$\n\n20,706,847\n\n​\n\nSee notes to consolidated financial statements\n\n38\n\n[Table of Contents](#TOC)\n\n**Research Solutions, Inc. and Subsidiaries**\n\n**Consolidated Statements of Cash Flows**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Cash flow from operating activities:**\n\n​\n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nNet income\n\n​\n\n$\n\n2,822,068\n\n​\n\n$\n\n1,265,553\n\nAdjustment to reconcile net income to net cash provided by operating activities:\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nDepreciation and amortization\n\n​\n\n \n\n1,254,973\n\n​\n\n \n\n1,245,362\n\nStock options expense\n\n​\n\n \n\n330,374\n\n​\n\n \n\n205,457\n\nRestricted common stock expense\n\n​\n\n \n\n598,142\n\n​\n\n \n\n1,518,104\n\nAccreted interest expense\n\n​\n\n​\n\n1,040,293\n\n​\n\n​\n\n—\n\nAdjustment to contingent earnout liability\n\n​\n\n​\n\n—\n\n​\n\n​\n\n1,748,526\n\nChanges in operating assets and liabilities:\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nAccounts receivable\n\n​\n\n \n\n228,194\n\n​\n\n \n\n(341,434)\n\nPrepaid expenses and other current assets\n\n​\n\n \n\n(109,291)\n\n​\n\n \n\n63,296\n\nPrepaid royalties\n\n​\n\n \n\n(410,372)\n\n​\n\n \n\n1,066,312\n\nAccounts payable and accrued expenses\n\n​\n\n \n\n(1,262,918)\n\n​\n\n \n\n(1,426,282)\n\nDeferred revenue\n\n​\n\n \n\n782,957\n\n​\n\n \n\n1,678,272\n\nNet cash provided by operating activities\n\n​\n\n \n\n5,274,420\n\n​\n\n \n\n7,023,166\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Cash flow from investing activities:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nPurchase of property and equipment\n\n​\n\n \n\n(39,771)\n\n​\n\n \n\n(19,261)\n\nNet cash used in investing activities\n\n​\n\n \n\n(39,771)\n\n​\n\n \n\n(19,261)\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Cash flow from financing activities:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nProceeds from the exercise of stock options\n\n​\n\n​\n\n157,500\n\n​\n\n​\n\n180,800\n\nCommon stock repurchase\n\n​\n\n​\n\n(53,039)\n\n​\n\n​\n\n(934,577)\n\nPayment of contingent acquisition consideration - Scite and FIZ\n\n​\n\n​\n\n(4,950,209)\n\n​\n\n​\n\n(124,107)\n\nNet cash used in financing activities\n\n​\n\n \n\n(4,845,748)\n\n​\n\n \n\n(877,884)\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nEffect of exchange rate changes\n\n​\n\n \n\n14,070\n\n​\n\n \n\n1,260\n\nNet increase in cash and cash equivalents\n\n​\n\n \n\n402,971\n\n​\n\n \n\n6,127,281\n\nCash and cash equivalents, beginning of period\n\n​\n\n \n\n12,227,312\n\n​\n\n \n\n6,100,031\n\nCash and cash equivalents, end of period\n\n​\n\n$\n\n12,630,283\n\n​\n\n$\n\n12,227,312\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Supplemental disclosures of cash flow information:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nCash paid for income taxes\n\n​\n\n$\n\n71,213\n\n​\n\n$\n\n82,811\n\n​\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\n**Non-cash investing and financing activities:**\n\n​\n\n \n\n  ​\n\n​\n\n \n\n  ​\n\nContingent consideration accrual on asset acquisition\n\n​\n\n$\n\n—\n\n​\n\n$\n\n31,359\n\nCommon stock issued for Scite earnout payment\n\n​\n\n$\n\n2,906,856\n\n​\n\n$\n\n—\n\n​\n\nSee notes to consolidated financial statements\n\n​\n\n39\n\n[Table of Contents](#TOC)\n\nRESEARCH SOLUTIONS, INC. AND SUBSIDIARIES\n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n**For the Years Ended June 30, 2026 and 2025**\n\nNote 1.  Organization, Nature of Business and Basis of Presentation\n\nOrganization\n\nResearch 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 five wholly owned subsidiaries: Reprints Desk, Inc., (“Reprints Desk”) a Delaware corporation, including its wholly owned subsidiary Resolute Innovation, Inc., (“ResoluteAI”) a Delaware corporation, Scite, LLC, (“Scite”) a Delaware limited liability company, Reprints Desk Latin America S. de R.L. de C.V., (“Reprints Desk Latin America”) an entity organized under the laws of Mexico, and RESSOL LA, S. DE R.L. DE C.V., (“ResSol LA”) an entity organized under the laws of Mexico.\n\nNature of Business\n\nWe are a vertical software-as-a-service (“SaaS”) and artificial intelligence (“AI”) company providing software and related services to help research-intensive organizations simplify the research process, save time and money. We offer various software platforms (“Platform” or “Platforms”) that are typically sold to corporate, academic, government and individual researchers as cloud-based SaaS via auto-renewing license agreements. Corporate, academic, and government customers typically sign up under annual or multi-year agreements paid annually in advance. Individual researchers can sign up under an annual or a month-to-month agreement and are typically billed monthly. Our Platforms also facilitate the sale of published scientific, technical, and medical (“STM”) content sold as individual articles (“Transactions”) either stand alone or via one or more of the research Platform solutions we provide. When one or more of the Platform solutions are used to purchase Transactions, customers pay for those Transactions through monthly billing or via credit card for individual researchers. In addition, our Platforms facilitate rights and permissions for customers to re-use content, ensuring copyright compliance for research, regulatory and marketing use cases as well as the utilization of content with AI applications and for the training of AI models. Our Platforms enable life science and other research-intensive organizations to simplify their research and development activities through our advanced search (i.e. Discovery Tools), tools to access and buy STM articles required to support their research (i.e. Access), as well as tools that manage that content across the enterprise and on an individual basis (i.e. Manage). The Platforms also include advanced AI (“Generative AI”) based assistants to help researchers understand the quality of the articles they are reviewing, speed up the review process, and to more fully understand how various research papers relate to each other.  In addition to STM content, the Platforms provide additional context to the research process by including the ability to search and assimilate a variety of other types of data such as patent, clinical trial, regulatory and competitive intelligence data. They also typically deliver a return on investment to the customer by reducing the amount of time it takes a research organization to find, acquire and manage content, in addition to also driving down the ultimate cost per article and overall research costs over time.\n\nPlatforms\n\nOur cloud-based SaaS Platforms consist of proprietary software and Internet-based interfaces sold to customers through an annual or monthly subscription fee. Legacy functionality falls into three areas.\n\nDiscovery Tools – Our Scite.ai and Resolute.ai solutions facilitate search (discovery) across virtually all STM articles available. These solutions include basic search solutions and advanced search tools. These tools allow for searching and identifying relevant research and then purchasing that research through one of our other solutions. In addition, these tools increasingly enable users to find insights in other datasets adjacent to STM content, such as clinical trial, patent, life science & medtech regulatory information, competitor and technology landscape insights, in addition to searching the customer’s internal datasets. Scite.ai includes full text search capability on most of the world’s STM content providing better search results and citation information as supporting or contrasting evidence. This powers our AI assistant and literature search engine and gives researchers better insights into any topic. The advanced search solutions are sold through a seat, enterprise, or individual license. These Platforms are deployed as a single, multi-tenant system across our entire customer base. Customers securely access the Platforms through online web interfaces and via web service APIs that enable\n\n40\n\n[Table of Contents](#TOC)\n\ncustomers to leverage Platform features and functionality from within in-house and third-party software systems. The Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms’ efficiencies in scalability, stability and development costs to fuel rapid innovation and competitive advantage.\n\nAccess – Our Article Galaxy® (“AG”) and Article Galaxy Scholar (Academic Library version) (“AGS”) solutions allow for research organizations to load their entitlements (subscriptions, discount or token packages, and their existing content library of articles) and AG/AGS manages those entitlements in the background enabling the researchers to focus on acquiring articles they need quickly and efficiently at the lowest possible cost. When used in conjunction with our Discovery Tools Platforms, customers can initiate orders, route orders based on the lowest cost to acquire, obtain spend and usage reporting, automate authentication, and connect seamlessly to in-house and third-party software systems. In addition, Article Galaxy facilitates rights and permissions for various re-use cases, including the utilization in AI applications and training of AI applications, ensuring copyright compliance for our customers.\n\nManage – Our References solution offers a comprehensive reference management solution with built-in document delivery capabilities specifically designed to meet the collaboration and security needs of research- intensive organizations.  This user-friendly Platform enables researchers to seamlessly organize their literature, collaborate with team members, and access a vast collection of scientific content. By integrating organization tools with instant access to millions of scholarly articles, our References solution streamlines the research workflow and enhances productivity for scientific professionals.\n\nAI models are integral to powering the unique insights our platforms provide as well as the user experience customers enjoy. Natural language processing (“NLP”) and AI models are used to enhance metadata, define connections between topics and content items as well as to generate data and metrics employed to enable users to rapidly identify and understand the value of content they need for their research. We also use state of the art AI models, such as large language models (“LLM”) to include generative AI “assistants” in several parts of the research workflow today and will continually add capability as we move forward. Today we employ generative AI technologies as a basis for our recommendation engine in our Discovery Tools, Access, and Manage Platform solutions. In addition, generative AI based “assistants” in some of our solutions allow the researcher to ask questions about articles, groups of articles (folders), and more. We also have the capability to provide near full text search on STM content in the Scite.ai solution where the publisher gives us the rights to do so. The ability to not only mine an article’s full text but also show snippets of full text is unique to our Company and allows our generative AI assistants to provide highly accurate results with a very low incidence of hallucinations as part of a retrieval augmented generation framework focused just on STM content. We intend to continue investing in our platforms and in our integrations with third-party AI applications, through new product enhancements and expanded dataset coverage.\n\nOur Platforms are generally deployed as a single, multi-tenant system across our entire customer base. Customers securely access the 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. Our Platforms can also be configured to satisfy a customer’s individual preferences. We leverage our Platforms efficiencies in scalability, stability and development costs to fuel rapid innovation and to gain a competitive advantage.\n\nTransactions\n\nWe provide our researchers with a single source to the universe of published STM content that includes 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. In addition, we add between 2 to 4 million newly published STM articles each year. STM content is rented or sold to our customers on a per 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 and while they typically purchase the articles via one of our Platform solutions, we do have some customers that just order articles from us on behalf of end-users in their organizations.\n\nCore to many of our Platform solutions is providing our customers with ways 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\n\n41\n\n[Table of Contents](#TOC)\n\nsource and electronically deliver to them generally in under an hour, in most cases in seconds. 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 and we are expanding these services to include the use of content in AI applications and for the training of AI models. 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 seconds. While a vast majority of the articles are available in electronic form, the Company also has workflows to deliver older paper-based articles through relationships we have built with libraries around the world.\n\nPrinciples of Consolidation\n\nThe 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.\n\n​\n\n​\n\nNote 2.   Summary of Significant Accounting Policies\n\nUse of Estimates\n\nThe preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles (“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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.\n\nThese estimates and assumptions include estimates for reserves of uncollectible accounts, the valuation of goodwill and intangible assets related to the Company’s acquisitions, accruals for contingent earnout liabilities, assumptions made in valuing equity instruments issued for services or acquisitions, and realization of deferred tax assets.\n\nCash and Cash Equivalents\n\nThe Company defines cash equivalents as all highly liquid debt instruments purchased with an original maturity of three months or less. In all periods presented, cash equivalents consist primarily of money market funds.\n\nAllowance for Credit Losses\n\nThe Company’s trade accounts receivable are recorded at amounts billed to customers and presented on the consolidated balance sheet net of the allowance for estimated credit losses, and typically due within 30 days. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses, the Company’s forecast and an overall assessment of trade accounts receivable outstanding. The Company established an allowance for doubtful accounts of $103,217 and $182,324 as of June 30, 2026 and 2025, respectively. The Company recorded a credit to bad debt expense of approximately $23,000 in the year ended June 30, 2026 and a bad debt expense of approximately $141,000 in the year ended June 30, 2025. The Company had write-offs of approximately $56,000 and $49,000 in the years ended June 30, 2026 and 2025, respectively, which reduced the allowance for doubtful accounts.\n\nConcentration of Credit Risk\n\nFinancial 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 financial condition, generally without\n\n42\n\n[Table of Contents](#TOC)\n\ncollateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and intends to maintain allowances for anticipated losses, as required.\n\nCash denominated in Euros, British Pounds and Japanese Yen with an aggregate US Dollar equivalent of $779,978 and $426,658 at June 30, 2026 and 2025, respectively, was held by Reprints Desk in accounts at financial institutions.\n\nThe Company has no customers that represent 10% of revenue or more for the years ended June 30, 2026 and 2025.\n\nThe Company has no customers that represent 10% of accounts receivable at June 30, 2026 and 2025.\n\nThe following table summarizes vendor concentrations for content cost:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended**\n\n \n\n​\n\n​\n\n**June 30, **\n\n \n\n​\n\n​\n\n**2026**\n\n**  ​**\n\n**  ​**\n\n**2025**\n\n​\n\nVendor A\n\n​\n\n28\n\n%\n\n​\n\n27\n\n%\n\nVendor B\n\n​\n\n11\n\n%\n\n​\n\n10\n\n%\n\n​\n\nSoftware Costs\n\nBased on its nature, the Company’s software development costs are expensed as incurred. The finalization of the Company’s project development process precipitates the rapid commercialization and deployment of new products and enhancements. The Company continuously reviews its projects, processes and the nature of its software development costs to determine if there are changes that would meet the requirements for capitalization under Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software.\n\nResearch and Development Costs\n\nThe Company’s research and development costs are primarily comprised of technology and product development  personnel and cloud computing service costs. The total research and development costs during the years ended June 30, 2026 and 2025 were $3,132,876 and $2,530,959, respectively and were included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.\n\nAdvertising Costs\n\nThe Company’s advertising costs are expensed as incurred in accordance with ASC 720-35, Advertising Costs. The total advertising expense during the years ended June 30, 2026 and 2025 were $1,567,919 and $1,630,259, respectively, and were included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.\n\nProperty and Equipment\n\nProperty and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of 3 to 5 years. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals are included in the consolidated statements of operations and comprehensive income.\n\nManagement assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended June 30, 2026 and 2025, the Company did not recognize any impairments for its property and equipment.\n\n43\n\n[Table of Contents](#TOC)\n\nLong-lived Assets\n\nThe Company reviews all long-lived assets, including property and equipment and finite-lived intangible assets, for impairment when circumstances indicate that their carrying values may not be recoverable. If the carrying value of an asset group is not recoverable, the Company recognizes an impairment loss for the excess carrying value over the fair value in our consolidated statements of operations and comprehensive income. For the years ended June 30, 2026 and 2025, the Company did not recognize any impairments for its long-lived assets.\n\nRevenue Recognition\n\nThe Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.\n\nRevenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company derives its revenues from two sources: annual or monthly licenses that allow customers to access and utilize certain premium features of our cloud-based SaaS research intelligence platforms and the transactional sale of STM content managed, sourced and delivered through the Platform. In the years ended June 30, 2026 and 2025, the Company recognized revenue of $9,254,008 and $7,248,767 that was included in the deferred revenue at the beginning of each respective period. This revenue was recorded for the fulfillment of performance obligations related to cloud-based software subscriptions. Deferred revenue and accounts receivable, net were $9,023,848, and $6,879,800 as of June 30, 2024, respectively.\n\nThe Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:\n\n●identify the contract with a customer;\n\n●identify the performance obligations in the contract;\n\n●determine the transaction price;\n\n●allocate the transaction price to performance obligations in the contract; and\n\n●recognize revenue as the performance obligation is satisfied.\n\nPlatforms\n\nWe charge a subscription fee that allows customers to access and utilize certain premium features of our Platforms. Revenue is recognized ratably over the term of the subscription agreement, which is typically one year, provided all other revenue recognition criteria have been met. Billings or payments received in advance of revenue recognition are recorded as deferred revenue.\n\n44\n\n[Table of Contents](#TOC)\n\nTransactions\n\nWe charge a transactional service fee for the electronic delivery of single articles, and a corresponding copyright fee for the permitted use of the content. We recognize revenue from single article delivery services upon delivery to the customer provided all other revenue recognition criteria have been met.\n\nRevenue by Geographical Region\n\nThe following table summarizes revenue by geographical region:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended**\n\n​\n\n​\n\n​\n\n**June 30, **\n\n​\n\n​\n\n​\n\n**2026**\n\n** **\n\n​\n\n**2025**\n\n​\n\nUnited States\n\n​\n\n$\n\n27,231,305\n\n  ​ ​ ​\n\n56.4\n\n%  \n\n​\n\n$\n\n28,213,701\n\n​\n\n57.5\n\n%\n\nEurope\n\n​\n\n \n\n15,942,672\n\n \n\n33.0\n\n%  \n\n​\n\n \n\n15,689,693\n\n \n\n32.0\n\n%\n\nRest of World\n\n​\n\n \n\n5,132,980\n\n \n\n10.6\n\n%  \n\n​\n\n \n\n5,154,587\n\n \n\n10.5\n\n%\n\nTotal\n\n​\n\n$\n\n48,306,957\n\n \n\n100\n\n%  \n\n​\n\n$\n\n49,057,981\n\n \n\n100\n\n%\n\n​\n\nAccounts Receivable, Net by Geographical Region\n\nThe following table summarizes accounts receivable, net by geographical region:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended**\n\n** **\n\n​\n\n​\n\n**June 30, **\n\n** **\n\n​\n\n​\n\n**2026**\n\n** **\n\n​\n\n**2025**\n\n​\n\nUnited States\n\n  ​ ​ ​\n\n$\n\n3,822,084\n\n  ​ ​ ​\n\n54.9\n\n%  \n\n​\n\n$\n\n4,033,807\n\n​\n\n56.1\n\n%\n\nEurope\n\n​\n\n \n\n2,226,167\n\n \n\n32.0\n\n%  \n\n​\n\n \n\n2,413,906\n\n \n\n33.6\n\n%\n\nRest of World\n\n​\n\n \n\n914,789\n\n \n\n13.1\n\n%  \n\n​\n\n \n\n743,521\n\n \n\n10.3\n\n%\n\nTotal\n\n​\n\n$\n\n6,963,040\n\n \n\n100\n\n%  \n\n​\n\n$\n\n7,191,234\n\n \n\n100\n\n%\n\n​\n\nBusiness Combinations\n\nThe 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. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations and comprehensive income.\n\nIntangible Assets\n\nAmortizable finite-lived identifiable intangible assets consist of developed technology, customer relationships, customer lists and intellectual property licenses acquired in prior acquisitions and are stated at cost less accumulated amortization. The developed technology, customer relationships and customer lists are being amortized over the estimated useful lives of 3 to 10 years.\n\n45\n\n[Table of Contents](#TOC)\n\nGoodwill\n\nGoodwill consists of the excess of the cost of ResoluteAI and Scite 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. The Company operates in a single reporting unit at the consolidated level. An impairment loss generally would be recognized when the 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 to perform an annual impairment test for its reporting unit on June 30 of each fiscal year. The Company did not record any impairment losses for the years ended June 30, 2026 or 2025.\n\nDeferred Revenue\n\nContract 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 when the consideration is due, from the customer.\n\nCash payments received or due in advance of 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 short-term and long-term liability on the Company's consolidated balance sheets based on when the revenue is expected to be recognized.\n\nCost of Revenue\n\nPlatforms\n\nCost of Platform revenue consists primarily of personnel costs of our operations team, and managed hosting providers and other third-party service and data providers.\n\nTransactions\n\nCost 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.\n\nSegment Reporting\n\nThe Company operates in a single segment which derives its revenue from subscription fees from its cloud-based SaaS Platforms and transactional service fees for the electronic delivery of singles articles, and a corresponding copyright fee for the permitted use of the content and it is based on how the chief operating decision maker (“CODM”) views and evaluates the Company’s operations in making operational and strategic decisions and assessments of financial performance. The Company’s President has been identified as the CODM.\n\n46\n\n[Table of Contents](#TOC)\n\nThe CODM regularly reviews revenue, certain significant expense categories, net income and select balance sheet items in evaluating segment performance. The significant segment expense categories and other segment items provided to the CODM and included in the measure of segment profit or loss are presented below.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year ended June 30,**\n\n​\n\n​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nRevenue\n\n​\n\n$\n\n48,306,957\n\n​\n\n$\n\n49,057,981\n\nCost of revenue\n\n​\n\n \n\n23,236,449\n\n​\n\n \n\n24,862,030\n\nGross profit\n\n​\n\n \n\n25,070,508\n\n​\n\n \n\n24,195,951\n\nGross profit margin\n\n​\n\n \n\n51.9%\n\n​\n\n \n\n49.3%\n\nSelling, general and administrative expenses:\n\n​\n\n \n\n​\n\n​\n\n​\n\n​\n\nSales and marketing\n\n​\n\n​\n\n6,397,899\n\n​\n\n​\n\n5,360,356\n\nTechnology and product development\n\n​\n\n \n\n6,121,647\n\n​\n\n \n\n5,631,344\n\nGeneral and administrative\n\n​\n\n \n\n6,724,399\n\n​\n\n \n\n7,936,644\n\nStock-based compensation expense\n\n​\n\n \n\n928,516\n\n​\n\n \n\n1,723,561\n\nForeign currency transaction loss (gain)\n\n​\n\n \n\n54,697\n\n​\n\n \n\n(202,527)\n\nTotal selling, general and administrative expenses\n\n​\n\n \n\n20,227,158\n\n​\n\n \n\n20,449,378\n\nDepreciation and amortization\n\n​\n\n​\n\n1,254,973\n\n​\n\n​\n\n1,245,362\n\nNet income\n\n​\n\n$\n\n2,822,068\n\n​\n\n$\n\n1,265,553\n\n​\n\nSegment net income includes other income, accreted interest expense, change in fair value of contingent earnout liability and provision for income taxes.\n\n​\n\nThe CODM also reviews the following balance sheet items at period-end as part of performance monitoring and resource allocation decisions:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year ended June 30,**\n\n​\n\n​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nCash and cash equivalents\n\n​\n\n$\n\n12,630,283\n\n  ​ ​ ​\n\n$\n\n12,227,312\n\nCurrent assets, excluding cash and cash equivalents\n\n​\n\n \n\n8,063,885\n\n \n\n​\n\n7,772,416\n\nLong term assets\n\n​\n\n \n\n24,970,550\n\n \n\n​\n\n26,120,946\n\nTotal segment assets\n\n​\n\n$\n\n45,664,718\n\n \n\n$\n\n46,120,674\n\n​\n\nBecause the Company operates as a single reportable segment, the amounts above reconcile directly to the corresponding consolidated financial statement line items.\n\nStock-Based Compensation\n\nThe 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 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. Depending on the type of restricted stock award, the fair value of our restricted stock is estimated based on the market price of the Company’s common stock on the date of grant or with the assistance of a valuation specialist, using the Monte Carlo simulations on a binomial model with a derived service period. The Company recognizes compensation expense on the straight-line basis over the requisite service period for awards subject to time vesting conditions and the graded tranche basis for awards subject to market vesting conditions. Forfeitures are accounted for as they occur. The Company recognizes stock-based compensation within its consolidated statements of operations and comprehensive income with classification depending on the nature of the services rendered.\n\n47\n\n[Table of Contents](#TOC)\n\nUnder ASC 718, for 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 equity instruments repurchased at the repurchase date. Any excess of the repurchase price over the fair value of the instruments repurchased shall be recognized as additional compensation cost.\n\nForeign Currency\n\nThe accompanying consolidated financial statements are presented in United States dollars, the reporting 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.\n\nGains 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 loss of $54,697 and a gain of $202,527 for the years ended June 30, 2026 and 2025, respectively.\n\n​\n\nNet Income Per Share\n\nBasic net income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period, excluding shares of unvested restricted common stock. Shares of restricted stock are included in the basic weighted average number of common shares outstanding from the time they vest. Diluted earnings per share is computed by dividing the net income applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Shares of restricted stock are included in the diluted weighted average number of common shares outstanding from the date they are granted. Potential common shares are excluded from the computation when their effect is antidilutive.\n\nThe following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n​\n\n**June 30,**\n\n​\n\n  ​ ​ ​\n\n  ​ ​ ​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nNet income available to common shareholders\n\n​\n\n​\n\n$\n\n2,822,068\n\n​\n\n$\n\n1,265,553\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nWeighted average commons shares - basic\n\n​\n\n​\n\n \n\n31,788,992\n\n​\n\n \n\n30,681,187\n\nDilutive effect of outstanding stock options\n\n​\n\n​\n\n \n\n465,981\n\n​\n\n \n\n822,785\n\nDilutive effect of unvested restricted common stock\n\n​\n\n​\n\n \n\n17,862\n\n​\n\n \n\n—\n\nWeighted average commons shares - diluted\n\n​\n\n​\n\n \n\n32,272,835\n\n​\n\n \n\n31,503,972\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nNet income per common share:\n\n​\n\n​\n\n \n\n​\n\n​\n\n​\n\n​\n\nBasic\n\n​\n\n​\n\n$\n\n0.09\n\n​\n\n$\n\n0.04\n\nDiluted\n\n​\n\n​\n\n$\n\n0.09\n\n​\n\n$\n\n0.04\n\n​\n\nWeighted average stock options excluded due to anti-dilution were 1,505,037 and 645,770 during the years ended June 30, 2026 and 2025. Shares of unvested restricted stock that were considered antidilutive were 913,792 and 1,223,342 during the years ended June 30, 2026 and 2025, respectively.\n\n​\n\n48\n\n[Table of Contents](#TOC)\n\nFair Value of Financial Instruments\n\nUnder FASB ASC Topic 820, *Fair Value Measurements and Disclosures*, fair value is defined as the price at which an asset could be exchanged or a liability transferred in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring fair value into three broad levels as follows:\n\nLevel 1 – Quoted prices in active markets for identical assets or liabilities.\n\nLevel 2 – Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.\n\nLevel 3 – Unobservable inputs based on the Company’s assumptions.\n\nThe Company is required to use observable market data if such data is available without undue cost and effort.\n\nThe following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities at fair value as of June 30, 2026 and 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**As of June 30, 2026**\n\n​\n\n**As of June 30, 2025**\n\n​\n\n**  ​ ​ ​**\n\n**Level 1**\n\n**  ​ ​ ​**\n\n**Level 2**\n\n**  ​ ​ ​**\n\n**Level 3**\n\n**  ​ ​ ​**\n\n**Total**\n\n**  ​ ​ ​**\n\n**Level 1**\n\n**  ​ ​ ​**\n\n**Level 2**\n\n**  ​ ​ ​**\n\n**Level 3**\n\n**  ​ ​ ​**\n\n**Total**\n\n​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nAssets\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nTotal assets\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n \n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n \n\n$\n\n—\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nLiabilities\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nContingent earnout liability\n\n​\n\n$\n\n—\n\n​\n\n​\n\n—\n\n​\n\n$\n\n7,323,314\n\n​\n\n$\n\n7,323,314\n\n​\n\n$\n\n—\n\n​\n\n​\n\n—\n\n​\n\n$\n\n14,046,640\n\n​\n\n$\n\n14,046,640\n\nTotal liabilities\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\n$\n\n7,323,314\n\n \n\n$\n\n7,323,314\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\n$\n\n14,046,640\n\n \n\n$\n\n14,046,640\n\n​\n\nOn December 1, 2023, the Company acquired 100% of the outstanding stock of Scite, Inc. a Delaware corporation (“Scite”). The total purchase consideration for Scite, net of cash acquired, was approximately $21.1 million. The consideration included an initial payment of $7.2 million in cash, $6.5 million in stock, a holdback of $0.2 million and a contingent earnout that had an initial fair value of $7.2 million. The Company’s contingent earnout liability balance was $14.0 million at June 30, 2025 and $7.3 million at June 30, 2026.\n\nOur contingent earnout liability related to the Scite acquisition is in the “Level 3” category for valuation purposes. As of June 30, 2026 and 2025, the contingent earnout liability fair value was estimated using the ending business to consumer annual recurring revenue figures as of May 30, 2025 and a 9% discount rate less payments made.\n\nThe Company finalized the calculation of the earnout for former shareholders of Scite at $15.4 million and recorded the final adjustment as of June 30, 2025. The earnout is comprised of a mix of cash and stock, with 62% of the earnout to be paid in cash and 38% in the Company’s common stock. The first of eight quarterly installment payments was disbursed in August 2025, with subsequent payments scheduled to continue quarterly until the final payment in May 2027. After June 30, 2025, the Company records accreted interest expense on the unpaid earnout liability. Prior to June 30, 2025, the change in fair value (which includes an interest component) was based on the assistance of a valuation specialist, using a Monte Carlo simulation of discounted cash flows based on management's forecast.\n\n49\n\n[Table of Contents](#TOC)\n\nThe following table summarizes the Company’s contingent earnout liability activity:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n**June 30,**\n\n​\n\n  ​ ​ ​\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nBeginning balance, contingent earnout liability\n\n​\n\n$\n\n14,046,640\n\n​\n\n$\n\n12,298,114\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nChange in fair value of contingent earnout liability\n\n​\n\n \n\n—\n\n​\n\n \n\n1,748,526\n\nAccreted interest expense\n\n​\n\n \n\n1,040,293\n\n​\n\n \n\n—\n\nScite earnout payments in cash\n\n​\n\n \n\n(4,856,763)\n\n​\n\n \n\n—\n\nScite earnout payments in shares of common stock\n\n​\n\n \n\n(2,906,856)\n\n​\n\n \n\n—\n\nEnding balance, contingent earnout liability\n\n​\n\n$\n\n7,323,314\n\n​\n\n$\n\n14,046,640\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nThe carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments.\n\nIncome Taxes\n\nThe Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.\n\nRecently Issued Accounting Pronouncements\n\nIn December 2023, the FASB amended ASC 740, Income Taxes (issued under Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures”). This ASU requires additional disclosures related to the rate reconciliation, income taxes paid and other amendments intended to enhance effectiveness and comparability. The Company adopted this accounting pronouncement for the year ended June 30, 2026, using the prospective method of adoption. As a result, we have enhanced our income tax disclosures for the fiscal year ended June 30, 2026 and going forward. Because ASU 2023-09 relates solely to disclosure requirements, adoption did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows.\n\nIn November 2024, the FASB issued ASU No. 2024-03 “Income Statement - Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40)” which requires disclosure each reporting period, in the notes to the financial statements, of specified information about certain costs and expenses. The new requirements will be effective for the Company for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its annual disclosures.\n\nIn September 2025, the FASB issued ASU 2025-06 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”, which eliminates project stages and requires capitalizing costs when management has committed to funding the project and it is probable of completion. In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is a significant uncertainty associated with the development activities of the software. The new requirements will be effective for the Company for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The guidance may be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-06.\n\n50\n\n[Table of Contents](#TOC)\n\nOther 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 present or future consolidated financial statements.\n\n​\n\nNote 3.   Property and Equipment\n\nProperty and equipment consists of the following as of June 30, 2026 and 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**June 30, **\n\n**  ​ ​ ​**\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n​\n\n**2025**\n\nComputer equipment\n\n​\n\n$\n\n755,208\n\n​\n\n$\n\n702,611\n\nSoftware\n\n​\n\n \n\n282,080\n\n​\n\n \n\n282,080\n\nFurniture and fixtures\n\n​\n\n \n\n41,624\n\n​\n\n \n\n40,961\n\nTotal\n\n​\n\n \n\n1,078,912\n\n​\n\n \n\n1,025,652\n\nLess accumulated depreciation\n\n​\n\n \n\n(1,020,241)\n\n​\n\n \n\n(964,883)\n\nNet, Property and equipment\n\n​\n\n$\n\n58,671\n\n​\n\n$\n\n60,769\n\n​\n\nDepreciation expense for the years ended June 30, 2026 and 2025 was $44,515 and $43,899, respectively.\n\n​\n\nNote 4.   Intangible Assets\n\n​\n\nIntangible assets consist of developed technology, customer relationships, customer lists and intellectual property licenses acquired in prior acquisitions and are stated at cost less accumulated amortization. The developed technology, customer relationships and customer lists are being amortized over the estimated useful lives of 3 to 10 years. The Company does not have any intangible assets deemed to have indefinite lives. Amortization expense for the years ended June 30, 2026 and 2025 was $1,201,458 and $1,201,463, respectively. Amortization expense expected to be recognized is approximately $1,173,000 annually in 2027 through 2031 and approximately $2,670,000 thereafter.\n\n​\n\nIntangible assets consist of the following as of June 30, 2026 and 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**June 30, **\n\n**  ​ ​ ​**\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n​\n\n**2025**\n\nDeveloped technology\n\n​\n\n$\n\n10,800,000\n\n​\n\n$\n\n10,800,000\n\nCustomer relationships\n\n​\n\n​\n\n170,000\n\n​\n\n​\n\n170,000\n\nCustomer lists\n\n \n\n​\n\n1,498,676\n\n \n\n​\n\n1,436,589\n\nIntellectual property licenses\n\n​\n\n​\n\n16,425\n\n​\n\n​\n\n16,425\n\nTotal\n\n​\n\n​\n\n12,485,101\n\n​\n\n​\n\n12,423,014\n\nLess accumulated amortization:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nDeveloped technology\n\n​\n\n​\n\n(2,856,666)\n\n​\n\n​\n\n(1,776,667)\n\nCustomer relationships\n\n​\n\n​\n\n(94,592)\n\n​\n\n​\n\n(59,493)\n\nCustomer lists\n\n​\n\n​\n\n(979,548)\n\n​\n\n​\n\n(884,188)\n\nIntellectual property licenses\n\n​\n\n​\n\n(16,425)\n\n​\n\n​\n\n(16,425)\n\nNet, Intangible assets\n\n \n\n$\n\n8,537,870\n\n \n\n$\n\n9,686,241\n\n​\n\n​\n\n​\n\nNote 5.   Line of Credit\n\nOn April 15, 2024, the Company entered into a Loan Agreement (the “PNC Loan Agreement”) with PNC Bank, National Association (“PNC”), as lender. Pursuant to the PNC Loan Agreement, the Company entered into a Revolving Line of Credit Note (the “PNC Note”) with PNC, which provides for a $500,000 secured revolving line of credit that matures on April 15, 2027 and bears interest annually at the daily SOFR rate plus 2.5%, with accrued interest due and payable monthly. The PNC Note contains customary events of default including, among other things, payment defaults, material misrepresentations, breaches of covenants, revocation of guarantee, certain bankruptcy and insolvency events. There were no outstanding borrowings under the line of credit as of June 30, 2026 and 2025, respectively.\n\n51\n\n[Table of Contents](#TOC)\n\n​\n\n​\n\nNote 6.   Stockholders’ Equity\n\nStock Options\n\nIn 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. From November 2019 to November 2021, the Company's stockholders approved increases in the maximum number of shares of common stock that may be issued pursuant to awards granted under the 2017 Omnibus Incentive Plan from 1,874,513 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 June 30, 2026, there were 493,244 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 Plan vest (i) immediately or (ii) in installments over three years, with a one-year cliff, and have a term of ten years. The following table summarizes vested and unvested stock option activity:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**All Options**\n\n​\n\n**Vested Options**\n\n​\n\n**Unvested Options**\n\n​\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n**Weighted**\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n**Weighted**\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n**Weighted**\n\n​\n\n​\n\n​\n\n​\n\n**Average**\n\n​\n\n​\n\n​\n\n**Average**\n\n​\n\n​\n\n​\n\n**Average**\n\n​\n\n​\n\n​\n\n​\n\n**Exercise**\n\n​\n\n​\n\n​\n\n**Exercise**\n\n​\n\n​\n\n​\n\n**Exercise**\n\n​\n\n​\n\n**Shares**\n\n​\n\n**Price**\n\n​\n\n**Shares**\n\n​\n\n**Price**\n\n​\n\n**Shares**\n\n​\n\n**Price**\n\nOutstanding at July 1, 2024\n\n \n\n2,788,625\n\n \n\n$\n\n1.93\n\n \n\n2,529,856\n\n \n\n$\n\n1.85\n\n \n\n258,769\n\n \n\n$\n\n2.73\n\nGranted\n\n \n\n260,000\n\n \n\n​\n\n2.79\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n260,000\n\n \n\n​\n\n2.79\n\nOptions vesting\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n151,295\n\n \n\n​\n\n2.73\n\n \n\n(151,295)\n\n \n\n​\n\n2.73\n\nExercised\n\n \n\n(309,821)\n\n \n\n​\n\n1.44\n\n \n\n(309,821)\n\n \n\n​\n\n1.44\n\n \n\n—\n\n \n\n​\n\n—\n\nExpired\n\n​\n\n—\n\n \n\n​\n\n—\n\n \n\n—\n\n \n\n​\n\n—\n\n \n\n—\n\n \n\n​\n\n—\n\nOutstanding at June 30, 2025\n\n \n\n2,738,804\n\n \n\n$\n\n2.06\n\n \n\n2,371,330\n\n \n\n$\n\n1.96\n\n \n\n367,474\n\n \n\n$\n\n2.77\n\nGranted\n\n \n\n260,000\n\n​\n\n​\n\n3.07\n\n \n\n—\n\n​\n\n​\n\n—\n\n \n\n260,000\n\n​\n\n​\n\n3.07\n\nOptions vesting\n\n \n\n—\n\n​\n\n​\n\n—\n\n \n\n237,645\n\n​\n\n​\n\n2.77\n\n \n\n(237,645)\n\n​\n\n​\n\n2.77\n\nExercised\n\n \n\n(278,500)\n\n​\n\n​\n\n0.85\n\n \n\n(278,500)\n\n​\n\n​\n\n0.85\n\n \n\n—\n\n​\n\n​\n\n—\n\nExpired\n\n \n\n(15,000)\n\n​\n\n​\n\n1.09\n\n \n\n(15,000)\n\n​\n\n​\n\n1.09\n\n \n\n—\n\n​\n\n​\n\n—\n\nOutstanding at June 30, 2026\n\n \n\n2,705,304\n\n​\n\n$\n\n2.29\n\n \n\n2,315,475\n\n​\n\n$\n\n2.18\n\n \n\n389,829\n\n​\n\n$\n\n2.97\n\n​\n\nThe 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 years ended June 30, 2026 and 2025.\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Year Ended**\n\n** **\n\n​\n\n​\n\n​\n\n**June 30, **\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​**\n\n**2025**\n\n​\n\n​\n\nExpected dividend yield\n\n \n\n—\n\n%  \n\n—\n\n%\n\n​\n\nRisk-free interest rate\n\n \n\n3.77\n\n%  \n\n4.26\n\n%\n\n​\n\nExpected life (in years)\n\n \n\n6\n\n \n\n6\n\n​\n\n​\n\nExpected volatility\n\n \n\n44.4\n\n%  \n\n46.3\n\n%\n\n​\n\n​\n\n52\n\n[Table of Contents](#TOC)\n\nThe weighted average remaining contractual life of all options outstanding as of June 30, 2026 was 4.86 years. The remaining contractual life for options vested and exercisable at June 30, 2026 was 4.16 years. Furthermore, the aggregate intrinsic value of options outstanding as of June 30, 2026 was $743,304, and the aggregate intrinsic value of options vested and exercisable as of June 30, 2026 was $743,304, in each case based on the fair value of the Company’s common stock on June 30, 2026. The aggregate intrinsic value of options outstanding as of June 30, 2025 was $2,265,673, and the aggregate intrinsic value of options vested and exercisable as of June 30, 2025 was $2,229,827, in each case based on the fair value of the Company’s common stock on June 30, 2025.\n\nDuring the year ended June 30, 2026, the Company granted 260,000 options to directors with a fair value of $382,200 which will be amortized over the vesting period. The total stock options expense during the year ended June 30, 2026 was $330,374 and was included in selling, general and administrative expenses in the accompanying consolidated statement of operations and comprehensive income. As of June 30, 2026, the amount of unvested compensation related to the unvested options was $466,689 which will be recorded as an expense in future weighted average vesting periods of 1.03 years. During the year ended June 30, 2026, the Company issued 250,624 net shares of common stock upon the exercise of options underlying 278,500 shares of common stock, resulting in net cash proceeds of $157,500. The aggregate intrinsic value of options exercised during the year ended June 30, 2026 was $573,770.\n\nDuring the year ended June 30, 2025, the Company granted 260,000 options to directors with a fair value of $364,000 which will be amortized over the vesting period. The total stock options expense during the year ended June 30, 2025 was $205,457 and was included in selling, general and administrative expenses in the accompanying consolidated statement of operations and comprehensive income. During the year ended June 30, 2025, the Company issued 223,534 net shares of common stock upon the exercise of options underlying 309,821 shares of common stock, resulting in net cash proceeds of $180,800. The aggregate intrinsic value of options exercised during the year ended June 30, 2025 was $471,452.\n\nAdditional information regarding stock options outstanding and exercisable as of June 30, 2026 is as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Option**\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n**Remaining**\n\n**  ​ ​ ​**\n\n​\n\n​\n\n**Exercise**\n\n​\n\n**Options**\n\n​\n\n**Contractual**\n\n​\n\n**Options**\n\n​\n\n**Price**\n\n​\n\n**Outstanding**\n\n​\n\n**Life (in years)**\n\n​\n\n**Exercisable**\n\n$\n\n1.05 - 1.59\n\n \n\n522,000\n\n \n\n0.39 - 1.86\n\n \n\n522,000\n\n​\n\n2.10 - 2.99\n\n \n\n1,707,304\n\n \n\n2.38 - 8.38\n\n \n\n1,577,475\n\n​\n\n3.13 - 3.50\n\n​\n\n476,000\n\n​\n\n3.37 - 9.38\n\n​\n\n216,000\n\n​\n\nTotal\n\n​\n\n2,705,304\n\n​\n\n​\n\n​\n\n2,315,475\n\n​\n\nRestricted Common Stock\n\nDuring the year ended June 30, 2026, the Company issued 205,000 shares of time vested restricted stock to employees. These shares vest over a three-year period, with one third vesting after one-year and quarterly thereafter, and remain subject to forfeiture if vesting conditions are not met. The aggregate fair value of these stock awards was $524,950 based on the market price of our common stock ranging from $2.36 to $2.94 per share on the date of grant, which will be amortized over the range of a three-year vesting period. No shares were granted with these vesting conditions during the year ended June 30, 2025.\n\n53\n\n[Table of Contents](#TOC)\n\nDuring the year ended June 30, 2025, the Company issued 590,000 shares of restricted stock to employees with an aggregate fair value of $1,309,240. The 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”). No shares were granted under the LTEBP during the year ended June 30, 2026.\n\nThe LTEBP replaces the previous restricted stock compensation program for executives. It first became effective on August 19, 2022, and grants under the program span 5 years from the grant date. The LTEBP 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 reaching the following targets:\n\n•\n\n20% at a 30-day VWAP of $3.00 per share (vestings occurred on March 14, 2024 and December 9, 2024);\n\n•20% at a 30-day VWAP of $3.75 per share (vesting occurred on January 3, 2025);\n\n•20% at a 30-day VWAP of $4.50 per share;\n\n•20% at a 30-day VWAP of $5.25 per share; and\n\n•20% at a 30-day VWAP of $6.00 per share.\n\n​\n\nUpon 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 LTEBP, 20,000 shares would vest upon our stock price achieving a 30-day VWAP of $3.00 per share, and 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.\n\nAs the vesting of the 590,000 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, with the assistance of a valuation specialist, to be $1,309,240, computed using the Monte Carlo simulations on a binomial model with a derived service period ranging from 0.64 to 2.33 years.\n\nThe total restricted common stock expense related to amortization of both time vested restricted stock awards and LTEBP restricted stock awards were $598,142 and $1,518,104 during the years ended June 30, 2026 and 2025, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income. As of June 30, 2026, the amount of unrecognized compensation related to issuances of restricted common stock was $520,476, which will be recognized as an expense in future weighted average vesting periods of 1.06 years. When calculating basic net income per share, these shares are included in weighted average common shares outstanding from the time they vest. When calculating diluted net income per share, these shares are included in weighted average common shares outstanding as of their grant date, using the treasury method. From the 33,513,551 shares issued and outstanding on the consolidated balance sheet as of June 30, 2026, 1,093,793 shares are subject to vesting and are not considered outstanding for accounting purposes. From the 32,479,993 shares issued and outstanding on the consolidated balance sheet as of June 30, 2025, 1,399,210 shares are subject to vesting and are not considered outstanding for accounting purposes.\n\n54\n\n[Table of Contents](#TOC)\n\nThe following table summarizes restricted common stock activity:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n**Weighted**\n\n​\n\n​\n\n​\n\n​\n\n**Average**\n\n​\n\n​\n\n**Number of**\n\n​\n\n**Grant Date**\n\n​\n\n​\n\n**Shares**\n\n​\n\n**Fair Value**\n\nNon-vested, June 30, 2024\n\n \n\n1,957,726\n\n​\n\n$\n\n1.57\n\nGranted\n\n \n\n590,000\n\n​\n\n \n\n2.22\n\nVested\n\n \n\n(829,932)\n\n​\n\n \n\n2.04\n\nForfeited\n\n** **\n\n(318,584)\n\n​\n\n \n\n1.41\n\nNon-vested, June 30, 2025\n\n \n\n1,399,210\n\n​\n\n$\n\n1.61\n\nGranted\n\n \n\n205,000\n\n​\n\n \n\n2.56\n\nVested\n\n \n\n(73,750)\n\n​\n\n \n\n2.63\n\nForfeited\n\n \n\n(436,667)\n\n​\n\n \n\n1.44\n\nNon-vested, June 30, 2026\n\n \n\n1,093,793\n\n​\n\n$\n\n1.78\n\n​\n\nCommon Stock Repurchase and Retirement\n\nEffective as of March 19, 2024, the Compensation Committee of our board of directors authorized the repurchase, on the last day of each trading window during which the outstanding awards remain outstanding and otherwise in accordance with our insider trading policies, of an aggregate value not exceeding $750,000 (the “Repurchase Cap”), in addition to the prior remaining balance of outstanding common stock of $330,774 (at prices no greater than $4.00 per share) (the “Repurchase Price Cap”)) from our employees to satisfy their tax obligations in connection with the vesting of stock incentive awards through the end of fiscal year 2025. Effective as of December 19, 2024, the Compensation Committee of our board of directors authorized an increase in the Repurchase Cap to an aggregate value not exceeding $1,500,000 and the Repurchase Price Cap to a price no greater than $5.50 per share. Effective as of May 6, 2025, the Compensation Committee of our board of directors authorized the repurchase of shares of common stock in satisfaction of tax withholding obligations at any time during a trading window during which outstanding awards remain outstanding and otherwise in accordance with our insider trading policies. 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.\n\nDuring the years ended June 30, 2026 and 2025, the Company repurchased 17,800 and 310,330 shares of our common stock under the repurchase plan at a weighted average price of $2.98 and $3.01 per share, respectively, for an aggregate amount of $53,039 and $934,577, respectively. As of June 30, 2026, $109,277 remained under the current authorization to repurchase our outstanding common stock from our employees.\n\nShares repurchased are retired and deducted from common stock for par value and from additional paid in capital for the excess over par value. Direct costs incurred to acquire the shares are included in the total cost of the shares.\n\n55\n\n[Table of Contents](#TOC)\n\nThe following table summarizes repurchases of our common stock on a monthly basis:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n​\n\n**  ​ ​ ​**\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Approximate Dollar Value**\n\n​\n\n​\n\n**Total Number**\n\n​\n\n**Average**\n\n​\n\n**of Shares that May Yet Be**\n\n​\n\n​\n\n**of Shares**\n\n​\n\n**Price Paid**\n\n​\n\n**Purchased Under the**\n\n**Period**\n\n​\n\n**Purchased**\n\n​\n\n**per Share**\n\n​\n\n**Plans or Programs**\n\nSeptember 2024\n\n \n\n5,757\n\n​\n\n$\n\n2.82\n\n \n\n$\n\n330,774\n\nDecember 2024\n\n \n\n48,132\n\n​\n\n$\n\n3.93\n\n \n\n​\n\n891,615\n\nMarch 2025\n\n \n\n246,707\n\n​\n\n$\n\n2.85\n\n \n\n​\n\n188,500\n\nJune 2025\n\n \n\n9,734\n\n​\n\n$\n\n2.69\n\n \n\n​\n\n162,316\n\nYear ended June 30, 2025\n\n \n\n310,330\n\n​\n\n$\n\n3.01\n\n \n\n$\n\n162,316\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\n \n\n​\n\n  ​\n\nSeptember 2025\n\n \n\n6,390\n\n​\n\n$\n\n3.66\n\n \n\n$\n\n138,929\n\nDecember 2025\n\n \n\n5,592\n\n​\n\n$\n\n2.89\n\n \n\n​\n\n122,767\n\nMarch 2026\n\n \n\n3,349\n\n​\n\n$\n\n2.34\n\n \n\n​\n\n114,931\n\nJune 2026\n\n \n\n2,469\n\n​\n\n$\n\n2.29\n\n \n\n​\n\n109,277\n\nYear ended June 30, 2026\n\n \n\n17,800\n\n​\n\n$\n\n2.98\n\n \n\n$\n\n109,277\n\n​\n\n​\n\n​\n\nNote 7.   Contingencies and Commitments\n\nLegal Proceedings\n\nThe Company is involved in legal proceedings in the ordinary course of its business. Although management of the Company cannot predict the ultimate outcome of these legal proceedings with certainty, it believes that the ultimate resolution of the Company’s legal proceedings, including any amounts it may be required to pay, will not have a material effect on the Company’s consolidated financial statements.\n\n​\n\nNote 8.   Income Taxes\n\nThe components of income before provision of income taxes are as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n**June 30, **\n\n​\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nUnited States\n\n​\n\n$\n\n2,821,968\n\n​\n\n$\n\n1,299,850\n\nForeign\n\n​\n\n \n\n133,142\n\n​\n\n \n\n48,514\n\nTotal income before provision for income taxes\n\n​\n\n$\n\n2,955,110\n\n​\n\n$\n\n1,348,364\n\n​\n\n56\n\n[Table of Contents](#TOC)\n\nThe provision for income taxes consists of the following for the years ended June 30, 2026 and 2025:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Years Ended**\n\n​\n\n​\n\n**June 30, **\n\n​\n\n**  ​ ​ ​**\n\n**2026**\n\n**  ​ ​ ​**\n\n**2025**\n\nCurrent\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nFederal\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\nState\n\n​\n\n \n\n86,990\n\n​\n\n \n\n33,613\n\nForeign\n\n​\n\n \n\n46,052\n\n​\n\n \n\n49,198\n\nDeferred\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\nFederal\n\n​\n\n \n\n—\n\n​\n\n \n\n—\n\nState\n\n​\n\n \n\n—\n\n​\n\n \n\n—\n\nForeign\n\n​\n\n \n\n—\n\n​\n\n \n\n—\n\nProvision for income tax expense\n\n​\n\n$\n\n133,042\n\n​\n\n$\n\n82,811\n\n​\n\nThe reconciliation from the federal statutory income tax rate to our effective income tax rate for the fiscal year ended June 30, 2026, applying ASU 2023-09 prospectively, is as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Amount**\n\n​\n\n**%**\n\nU.S. federal statutory income tax\n\n$\n\n620,573\n\n​\n\n21.0\n\n%  \n\nState tax, net of federal benefit\n\n \n\n69,858\n\n​\n\n2.3\n\n%  \n\nCross border laws\n\n​\n\n8,354\n\n​\n\n0.3\n\n%  \n\nForeign tax effects\n\n​\n\n18,092\n\n​\n\n0.6\n\n%  \n\nTax credits\n\n​\n\n(120,343)\n\n​\n\n(4.1)\n\n%  \n\nNon-taxable or non-deductible items:\n\n \n\n​\n\n​\n\n​\n\n​\n\nEquity compensation\n\n​\n\n233,104\n\n​\n\n7.9\n\n%  \n\nChange in earnout\n\n​\n\n218,462\n\n​\n\n7.4\n\n%  \n\nOther\n\n​\n\n8,346\n\n​\n\n0.3\n\n%  \n\nChange in valuation allowance\n\n \n\n(923,404)\n\n​\n\n(31.2)\n\n%  \n\nTotal\n\n$\n\n133,042\n\n​\n\n4.5\n\n%  \n\n​\n\nThe reconciliation from the federal statutory income tax rate to the effective income tax rate for the fiscal year ended June 30, 2025, applying ASC 740 prior to the adoption of AUS 2023-09, is as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**%**\n\n​\n\n​\n\nFederal income tax rate\n\n \n\n21.0\n\n%\n\n​\n\nState tax, net of federal benefit\n\n \n\n2.4\n\n%\n\n​\n\nChange in earnout\n\n​\n\n22.9\n\n%\n\n​\n\nAdjustment to prior year\n\n​\n\n(157.2)\n\n%\n\n​\n\nExecutive compensation\n\n​\n\n(11.6)\n\n%\n\n​\n\nOther permanent differences\n\n \n\n3.1\n\n%\n\n​\n\nForeign rate differential\n\n​\n\n2.9\n\n%\n\n​\n\nTax credits\n\n​\n\n(15.3)\n\n%\n\n​\n\nChange in valuation allowance\n\n \n\n137.9\n\n%\n\n​\n\nEffective income tax rate\n\n \n\n6.1\n\n%\n\n​\n\n​\n\nFor the year ended June 30, 2025, the majority of the adjustment to the prior year, primarily offset by the change in valuation allowance, was due to recording additional federal and state net operating losses (“NOL”) from stock acquisitions in prior years. This was precipitated by the finalization of a study to determine the amount of NOLs available after the change in ownership under Internal Revenue Code Section 382.\n\n57\n\n[Table of Contents](#TOC)\n\nDeferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2026 and 2025 are as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**June 30, **\n\n**  ​ ​ ​**\n\n**June 30, **\n\n​\n\n​\n\n**2026**\n\n​\n\n**2025**\n\nDeferred tax assets:\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nFederal net operating loss carryforward\n\n​\n\n$\n\n3,090,317\n\n​\n\n$\n\n3,475,943\n\nState net operating loss carryforward\n\n​\n\n \n\n498,731\n\n​\n\n \n\n479,222\n\nStock based compensation\n\n​\n\n \n\n953,875\n\n​\n\n \n\n1,164,121\n\nTax attributes\n\n​\n\n​\n\n289,986\n\n​\n\n​\n\n196,809\n\nResearch costs\n\n​\n\n​\n\n994,054\n\n​\n\n​\n\n1,713,966\n\nOther\n\n​\n\n \n\n18,906\n\n​\n\n \n\n63,948\n\nTotal deferred tax assets\n\n​\n\n \n\n5,845,869\n\n​\n\n \n\n7,094,009\n\nDeferred tax liability:\n\n​\n\n \n\n​\n\n​\n\n \n\n​\n\nDepreciation and amortization\n\n​\n\n \n\n(1,825,304)\n\n​\n\n \n\n(2,102,792)\n\nNet deferred tax assets\n\n​\n\n \n\n4,020,565\n\n​\n\n \n\n4,991,217\n\nLess valuation allowance\n\n​\n\n \n\n(4,020,565)\n\n​\n\n \n\n(4,991,217)\n\n​\n\n​\n\n$\n\n—\n\n​\n\n$\n\n—\n\n​\n\nThe Company has provided a valuation allowance on the deferred tax assets at June 30, 2026 and 2025 to reduce such assets to zero, since it is not deemed more likely than not that the Company will generate future taxable income to utilize such assets. Management will review this valuation allowance requirement periodically and adjust as warranted. The net change in the valuation allowance for the years ended June 30, 2026 and 2025 was a decrease of $970,652 and an increase of $1,858,749, respectively.\n\nAt June 30, 2026 and 2025, the Company had federal NOL carryforwards of approximately $14,716,000 and $16,552,000, respectively, and state NOL carryforwards of approximately $7,410,000 and $7,502,000, respectively. Federal NOLs generated after 2018 can be carried forward indefinitely with some limitations. Federal NOLs generated prior to that have a 20-year carryforward period. At June 30, 2026, all remaining federal NOLs can be carried forward indefinitely; however, of these NOLs, approximately $11,400,000 relate to companies acquired in prior years and are subject to annual limitations under IRC Section 382. State NOLs will begin to expire in 2031.\n\nThe Company is subject to taxation in the United States, various states and Mexico. The Company is subject to United States federal or state income tax examinations by certain tax authorities for fiscal year 2015 and forward, in part due to utilization of NOLs in the current fiscal year. The Company is currently not under examination in any jurisdiction.\n\nCash paid for income taxes (net of refunds) in the year ended June 30, 2026 consisted of the following:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**  ​ ​ ​**\n\n**Amount**\n\n​\n\nUnited States\n\n​\n\n$\n\n—\n\n​\n\nState:\n\n​\n\n \n\n​\n\n​\n\nCA\n\n​\n\n​\n\n3,210\n\n​\n\nFL\n\n​\n\n \n\n8,220\n\n​\n\nGA\n\n​\n\n \n\n3,950\n\n​\n\nIL\n\n​\n\n \n\n7,000\n\n​\n\nMA\n\n​\n\n \n\n11,938\n\n​\n\nMN\n\n​\n\n​\n\n3,105\n\n​\n\nTX\n\n​\n\n \n\n3,964\n\n​\n\nOther\n\n​\n\n​\n\n3,603\n\n​\n\nForeign\n\n​\n\n \n\n26,223\n\n​\n\nTotal\n\n​\n\n$\n\n71,213\n\n​\n\n​\n\n58\n\n[Table of Contents](#TOC)\n\nThe state taxes were made up primarily of FL, GA, IL, MA, and TX.  The foreign taxes were solely Mexico. Cash paid for income taxes (net of refunds) in the year ended June 30, 2025 were $82,811.\n\nAs of June 30, 2026 and 2025, the Company had no uncertain tax positions.\n\nThe Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of June 30, 2026 and 2025, the Company has no accrued interest or penalties related to uncertain tax positions.\n\n​\n\n​\n\nNote 9. Subsequent Events\n\nScite Earn-out\n\nOn August 2, 2026, the Company completed the fifth installment payment of cash and common stock associated with the earnout for the former shareholders of Scite, which consisted of cash of $1.2 million and 329,118 shares of the Company’s common stock being issued.\n\n​\n\n​\n\n​\n\n​\n\n59\n\n[Table of Contents](#TOC)"}