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Acquisitions

6 Months Ended

Dec. 31, 2023

Note 5. Acquisitions

FIZ

On September 28, 2022, Reprints Desk entered into an asset purchase agreement with FIZ Karlsruhe – Leibniz-Institut für Informationsinfrastruktur GmbH (“FIZ”). FIZ delivers STM content pursuant to various contracts with its customers through its AutoDoc platform. FIZ agreed to assign and transfer to Reprints Desk certain of these contracts effective January 1, 2023 (the “Sold Contracts”).

On September 30, 2022, Reprints Desk made a non-refundable payment of $297,450 (€300,000) (the “Base Amount”) as initial consideration for the asset purchase. As of December 31, 2023, Reprints Desk has paid $64,578 in contingent consideration for customers that have their Sold Contracts assumed by Reprints Desk in comparison to the trailing twelve months of revenue of all Sold Contracts (the “Base Amount Plus”). As of December 31, 2023, $88,522 in contingent consideration was recorded for customers that placed an order and have consented to have their contract assumed by Reprints Desk (the “Bonus Amount”). As of December 31, 2023, $96,121 and $42,911 of Bonus Amount payments were made for the 2023 fiscal year and 2024 fiscal year, respectively. The Bonus Amount is based upon the collectable service fee that FIZ would have received from these customers. Contingent consideration for the Bonus Amount will continue to be paid in arrears through the quarter ending December 31, 2025.

The current contingent consideration for the Base Amount Plus and the Bonus Amount is recorded as a short-term liability on the balance sheet. At December 31, 2023, the Base Amount, the Base Amount Plus and the Bonus Amount were recorded as intangible assets on the balance sheet with an estimated average useful life of 10 years.

ResoluteAI

On July 28, 2023, the Company acquired 100% of the outstanding stock of Resolute Innovation, Inc. (“ResoluteAI”), a Delaware corporation, an advanced search platform that equips organizations with search, discovery and knowledge management tools that are powered by artificial intelligence (“AI”) and neuro-linguistic programming (“NLP”) technologies.

The Company utilized the acquisition method of accounting for the acquisition in accordance with ASC 805, Business Combinations. The Company allocated the purchase price to ResoluteAI’s tangible assets, identifiable intangible assets, and assumed liabilities at their estimated fair values as of the date of acquisition. The excess of the purchase price paid by the Company over the estimated fair value of identified tangible and intangible assets has been recorded as provisional goodwill.

The total purchase consideration for ResoluteAI, net of cash acquired, was approximately $4.6 million. The consideration includes an initial payment of $2.7 million and a contingent earnout that has a fair value of $1.6 million as of December 31, 2023. The contingent earnout payment will be based upon the product of three and one half multiplied by ending annual recurring revenue as of January 31, 2025 less the agreed upon Enterprise Value of $3.4 million.

The Company’s allocation of the purchase price at December 31, 2023 included $0.2 million of receivables, $0.1 million of other assets, $2.1 million of provisional intangible assets and $3.2 million of provisional goodwill. The intangible assets acquired are developed technology and customer relationships with estimated average useful lives of 8 to 10 years. The Company also assumed $0.2 million of payables, $0.6 million of deferred revenue and $0.2 million of other liabilities as part of the acquisition.

The preliminary allocation of purchase price to the assets acquired and liabilities assumed was based upon the estimated fair values at the date of acquisition. As of December 31, 2023, the Company has not completed its analysis for estimating the fair value of the assets acquired and liabilities assumed.

Scite

On December 1, 2023, the Company acquired 100% of the outstanding stock of Scite, Inc. a Delaware corporation (“Scite”), a platform for discovering and evaluating scientific articles via Smart Citations. Smart Citations allow users to see how a publication has been cited by providing the context of the citation and a classification describing whether it allows for supporting or contrasting evidence for the cited claim.

The total purchase consideration for Scite, net of cash acquired, was approximately $20.9 million. The consideration includes an initial payment of $7.2 million in cash, $6.3 million in stock, a holdback of $0.2 million and a contingent earnout that has a fair value of $7.2 million as of December 31, 2023.

The Company’s allocation of the purchase price at December 31, 2023 included $0.1 million of receivables, $8.9 million of provisional intangible assets and $13.1 million of provisional goodwill. The intangible assets acquired are developed technology and customer relationships with estimated average useful lives of 3 to 10 years. The Company also assumed $1.2 million of deferred revenue as part of the acquisition.

The following sets out the unaudited pro forma operating results for the three and six months ended December 31, 2023 and 2022 for the Company had the acquisition occurred as of July 1, 2022. These amounts include amortization of intangible assets:


	Pro Forma (Unaudited)				Pro Forma (Unaudited)
	Three Months ended December 31,				Six Months ended December 31,
	2023		2022		2023		2022

Revenue	$	11,033,441	$	8,793,998	$	21,834,349	$	17,663,493
Cost of revenue		5,877,494		5,363,807		11,967,550		10,742,750
Gross profit		5,155,947		3,430,191		9,866,799		6,920,743

Total operating expenses		5,524,052		4,031,029		11,197,427		7,461,089

Loss from operations		(368,105)		(600,838)		(1,330,628)		(540,346)

Other income		376,426		74,695		516,737		113,764

Income (loss) from operations before provision for income taxes		8,321		(526,143)		(813,891)		(426,582)
Provision for income taxes		(10,057)		(782)		(39,459)		(4,915)

Pro Forma Net loss	$	(1,736)	$	(526,925)	$	(853,350)	$	(431,497)
Pro Forma Net loss per weighted average share, basic and diluted	$	-	$	(0.02)	$	(0.03)	$	(0.02)