UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Research Solutions, Inc
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
761025105
(CUSIP Number)
Merihan Tynan
Cove Street Capital, LLC
525 South Douglas Street, Suite 225 El Segundo, CA 90245
(424) 221-5897
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 15, 2023
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e),
240.13d-1(f) or 240.13d-1(g), check the following box.
Note: Schedules filed in paper format shall include a
signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled
out for a reporting person's initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover
page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act")
or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
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CUSIP No. 761025105
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13D |
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Page 1 of 5 Pages |
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1. |
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NAMES OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Cove Street Capital, LLC
27-5376591 |
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2. |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions) (a) ¨
(b) ¨ |
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3. |
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SEC USE ONLY |
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4. |
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SOURCE OF FUNDS (see instructions) OO |
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5. |
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ |
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6. |
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CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE |
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH |
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7. |
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SOLE VOTING POWER 0 |
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8. |
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SHARED VOTING POWER 1,262,592 |
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9. |
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SOLE DISPOSITIVE POWER 0 |
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10. |
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SHARED DISPOSITIVE POWER 2,400,778 (1) |
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11. |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,400,778 |
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions) ¨
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13. |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.14% (2) |
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14. |
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TYPE OF REPORTING PERSON (see instructions)
IA |
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(1) Percentage calculated based on 29,500,764 shares of Common Stock, par value $0.01 per share, outstanding as of
May 5, 2023 as reported in the Form 10-K for the fiscal year ended March 31, 2023 of Research Solutions, Inc. (2) 14,370 Shares
owned by Jeffrey Bronchick are in an SMA managed by Cove Street Captial LLC. 19,370 are owned by Jeffrey Bronchick related account
personally not managed by CSC 3) CSC Partners Fund, LP a Delaware limited partnership operated as a private investment partnership managed by Cove Street Capital LLC. |
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CUSIP No. 761025105
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13D |
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Page 2 of 5 Pages |
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1. |
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NAMES OF REPORTING PERSONS I.R.S.
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jeffrey Bronchick |
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2. |
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(see instructions) (a) ¨
(b) ¨ |
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3. |
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SEC USE ONLY |
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4. |
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SOURCE OF FUNDS (see instructions) OO, PF |
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5. |
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) ¨ |
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6. |
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CITIZENSHIP OR PLACE OF ORGANIZATION United States of America |
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING
PERSON WITH |
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7. |
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SOLE VOTING POWER 33,740 |
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8. |
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SHARED VOTING POWER 1,262,592 |
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9. |
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SOLE DISPOSITIVE POWER 33,740 |
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10. |
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SHARED DISPOSITIVE POWER 2,386,408(1) |
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11. |
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,434,518 |
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12. |
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (see instructions) ¨
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13. |
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.25% (2)
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14. |
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TYPE OF REPORTING PERSON (see instructions)
IN |
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(1) Percentage calculated based on 29,500,764 shares of Common Stock, par value $0.01 per share, outstanding as of May 5, 2023 as reported
in the Form 10-K for the fiscal year ended March 31, 2023 of Research Solutions, Inc.. (2) 14,370 Shares owned by Jeffrey Bronchick are
in an SMA managed by Cove Street Captial LLC. 19,370 are owned by Jeffrey Bronchick related account personally not managed by CSC. (3)
CSC Partners Fund, LP a Delaware limited partnership operated as a private investment partnership managed by Cove Street Capital LLC. |
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CUSIP No. 761025105 |
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13D |
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Page 3 of 5 Pages |
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Item 1. Security and Issuer.
This
statement relates to the Common stock, $0.001 par value (the "Shares"), of Research Solutions, Inc, a Nevada corporation (the
"Issuer" or "RSSS"). The principal executive offices of the Issuer are located at 10624 S. EASTERN AVE, SUITE A-614, HENDERSON, NV, 89052.
Item
2. Identity and Background.
a)
This statement is filed by:
(i)
Cove Street Capital, LLC,
a Delaware limited liability company (“CSC”), with respect to the Shares beneficially owned by it; and
(ii)
Jeffrey Bronchick, as a member of CSC.
Each
of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each
of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting
Persons are hereby filing a joint Schedule 13D.
b)
The address of the
principal office of each of the Reporting Persons is 525 South Douglas Street, Suite 225, El Segundo,
CA 90245
c)
The principal business of CSC is providing investment advisory and investment management services. Mr. Bronchick serves as a member
of CSC.
d)
No Reporting Person has, during
the last five years, been
convicted in
a criminal proceeding
(excluding traffic
violations or similar
misdemeanors).
e)
No Reporting Person has, during
the last five years,
been a party to a civil proceeding
of a judicial or administrative
body of competent
jurisdiction
and, as a result
of such proceeding,
was or is
subject to a
judgment,
decree
or final order (1)
enjoining
future violations
of, or prohibiting
or mandating
activities subject to, federal or state securities
laws, or (2) finding
any violation
with respect to such laws.
f)
CSC is organized under the laws of the state of Delaware. Mr. Bronchick is a citizen of the United States of America.
Item
3. Source or Amount of Funds or Other Consideration.
The
Shares held by CSC were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms
in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is
incorporated by reference herein. The aggregate purchase price of the 2,400,778 Shares beneficially owned by CSC is approximately
$5,301611 including brokerage commissions.
Item 4. Purpose of Transaction.
This
13D filing is to reflect the change from 13G to 13D. Last Filing was 13G dated December 31,2022 filing February 10, 2023.
Cove
Street Capital, on behalf of its advisory clients, has sent the enclosed letter to the Board of Directors, expressing its dismay over
the filing of a 13D on a August 4th, 2023 by the group led by the current Chairman of the Board, Peter Derycz, which we believe
is an inappropriate airing of internal Board issues to the detriment of all shareholders.
The
Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued
and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available
to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting
Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares
on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.
The
Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without
limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities
markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their
investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board
of Directors of the Issuer, engaging in discussions with stockholders of the Issuer or other third parties about the Issuer and the Reporting
Persons’ investment, including potential business combinations or dispositions involving the Issuer or certain of its businesses,
making recommendations or proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including
board composition), potential business combinations or dispositions involving the Issuer or certain of its businesses, or suggestions
for improving the Issuer’s financial and/or operational performance.
Item 5. Interest
in Securities of the Issuer.
The
aggregate percentages calculated based on 2,400,778 shares of Common Stock outstanding as of May 5, 2023, as reported on the Form
10-Q filed by the Issuer on May 12, 2023.
| (a) | As
of August 15, 2023, CSC beneficially owned 2,400,778 Shares. |
Percentage:
Approximately 8.15%
| (b) | 1.
Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 1,262,592
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition:
2,400,778 |
| (c) | The transactions in
the Shares by CSC in the past 60 days are set forth in Schedule A and are
incorporated herein by reference. |
| (a) | As of August 15, 2023,
Mr. Bronchick beneficially owns any RSSS Common Stock, however as a member of CSC, Mr. Bronchick may be deemed the beneficial owner
of the 2,434,518 Shares owned by CSC. |
Percentage:
Approximately 8.25%
| (b) | 1.
Sole power to vote or direct vote: 33,740
2. Shared power to vote or direct vote: 1,262,592
3. Sole power to dispose or direct the disposition: 33,740
4. Shared power to dispose or direct the disposition: 2,386,408 |
| (c) | Outside of the account
under the Management of Cove Street Capital, Mr. Bronchick, in a related account owns 19,370 shares. |
| (d) | CSC Partners Fund, LP a
Delaware limited partnership operated as a private investment partnership managed by Cove Street Capital LLC owns 469,296. |
The
filing of this Schedule 13D shall not be construed as an admission that the Reporting Persons are, for purposes of Section 13(d)
of the Securities Exchange Act of 1934, as amended, the beneficial owners of any of the securities reported herein. Each of the
Reporting Persons specifically disclaims beneficial ownership of the securities reported herein that are not directly owned by
such Reporting Person, except to the extent of their pecuniary interest therein.
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person other than the Reporting Persons is known to have the right to receive, or the
power to direct the receipt of dividends from, or proceeds from the sale of, the Shares. |
Item 6. Contracts,
Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
Except
as otherwise described in the original Schedule 13D, there are no contracts, arrangements, understandings, or relationships
(legal or otherwise) among CSC, or between any third party, with respect to any securities of the Issuer.
Item 7. Material
to Be Filed as Exhibits.
Ex.99.1 Letter
to the Board of Directors from Cove Street capital
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CUSIP No. 761025105 |
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13D |
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Page 4 of 5 Pages |
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SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: August
15, 2023
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Cove Street Capital LLC |
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/s/
Merihan Tynan
Name:
Merihan Tynan |
Title: Chief Compliance Officer; Principal |
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/s/ Jeffrey Bronchick
Jeffrey Bronchick |
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CUSIP No. 761025105 |
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13D |
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Page 5 of 5 Pages |
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SCHEDULE
A
Transactions
in the Shares in the past 60 days
COVE
STREET CAPITAL, LLC
Nature of the Transaction Securities |
Purchased/(Sold) |
Price ($) |
Date of Purchase / Sale |
Common Stock |
2,548 |
2.08 |
07/10/2023 |
Common Stock |
100 |
2.08 |
07/13/2023 |
Common Stock |
16,567 |
2.08 |
07/14/2023 |
Common Stock |
2,700 |
2.08 |
07/17/2023 |
Common Stock |
5,417 |
2.08 |
07/18/2023 |
Common Stock |
400 |
2.06 |
07/19/2023 |
Common Stock |
1,134 |
2.05 |
07/21/2023 |
Common Stock |
1,586 |
2.06 |
07/24/2023 |
Common Stock |
11,129 |
2.18 |
07/31/2023 |
Common Stock |
1,700 |
2.16 |
08/01/2023 |
August
10, 2023
The
Board of Directors
Research
Solutions, Inc.
5435
Balboa Ave.
Encino,
Ca. 91316
To
the Board of Directors:
I
am writing
to you
as the
Lead Principal
and Portfolio Manager of Cove
Street Capital, LLC,
an institutional
investment manager based in
Los Angeles.
We presently own 2.4mm shares of RSSS
representing 8.14%, which makes us
the 4th
largest shareholder.
We
are deeply perturbed by the Board's dysfunction on public display
with the August 4th 13-D
filing by founder and current Executive Chairman Peter Derycz and the Bristol Investment Fund,
which have formed an
investment group linked by family ties.
The
best decisions are made by small groups of people
with skin in the game and behind closed doors. Whatever the
merits brought by the group, there is simply zero reason for
these corporate discussions to be aired
publically. This is a
massive waste of time and corporate money that is
distracting to the corporate mission, arguably demoralizing to
employees, and likely distracting from new revenue opportunities.
We
would urge the Derycz group
to get behind closed doors with the rest of the Board
of Directors immediately and hash
out an appropriate solution
that is in the
best interests of shareholders.
To
be clear, Cove Street
Capital has carefully reviewed the Derycz group filing and
would vote a resounding
"against"
the slate of directors proposed by the group. We
fail to see any legitimate
en-masse improvement, and we conclude that a return
to "how it was"
would not in any way produce an
improvement in shareholder returns.
We
agree with the Derycz group that "we haven't made any money yet" either, but our long history in public,
small-cap investing suggests that building a "real" company
from the ideas and strategy of the founder take years and
longer than one thinks at the outset. Our stake was built
two years ago
with the addition of former
CSC Partner Eugene
Robin to the Board, the announcement
of board member Roy
Olivier as CEO,
and Mr. Derycz's movement to Executive Chairman. We helped put in
an aggressive compensation plan heavily weighted to
the share price, and our
first marker for existential review was the end of
fiscal 2024.
In the
letter, the Derycz group states that that SGA expenses
are up $3.7mm since Mr. Olivier became CEO. We would
note to shareholders at large:
1. |
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We are effectively paying for two CEO's, as Mr. Derycz receives $630k annually in total compensation through March 2024 as Executive Chairman. Our thought was this was acceptable as Mr. Olivier has excellent management chops, but lacked the vertical expertise and industry relationships that Mr. Derycz possessed. We are obviously not seeing much return on that Plan. |
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There is approximately another $1mm of stock compensation running through the income statement-post Mr. Derycz's tenure as CEO-under a plan Cove Street Capital was, and is, happy to have implemented and supported as management incentive. |
So
yes, the additional SGA is
part of the "build
it and they will come" model. This will be
a successful investment if this
plays out, but we don't see any
signs of material overspend, corporate over-reach, or anything
remotely concerning. But yes, we would obviously like
to see more annual recurring
revenue, growth on the higher margin, and a higher valued cloud-based platform
The
mission at Cove Street Capital
is simple: analyze business models, value companies, find and support
management with whom we think can
deliver for shareholders,
and tie their success to ours.
We think we have a business model with huge room for
growth and it is
being run carefully by team Olivier. M+A is conceptually
an important leg
of the upside, but RSSS
plays in an expensive world.
Better safer than sorry is not a terrible concept to
bring to the table
in this arena.
Mr.
Derycz deserves a shout-out as founder and strategist, but
as is often the case,
there is an additional
set of skills required to
take a small company to the
next level. To repeat, our analysis suggests that
the Derycz group slate does not offer shareholders
any uptick in competence and governance. Yes, there is
always room for improvement,
which again can be negotiated
behind closed doors as befits a group that
owns 20% of
the stock, but going public
in this form is not value adding for
the shareholders at large.
We
welcome the opportunity to discuss these issues with
all stakeholders.
Sincerely,
Jeffrey
Bronchick, CFA
Principal,
Portfolio Manager
Cove
Street Capital, LLC
El Segundo, California 90245525 South Douglas Street, Suite 225 |
F 424-221-5888
T 424-221-5897 |
questions@CoveStreetCapital.com
www.CoveStreetCapital.com |
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