trak20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to .

Commission File Number 001-34941

REPOSITRAK, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	37-1454128
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

5282 South Commerce Drive, Suite D292, Murray, Utah 84107

(Address of principal executive offices)

(435) 645-2000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which

registered

Common stock, par value $0.01 per share

TRAK

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of May15, 2024, 18,223,893 shares of the registrant’s common stock, $0.01 par value, were issued and outstanding.

REPOSITRAK, INC.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Condensed Balance Sheets as of March 31, 2024 and June 30, 2023 (Unaudited)	1
	Consolidated Condensed Statements of Operations and Comprehensive Income for the Three and Nine months Ended March 31, 2024 and 2023 (Unaudited)	2
	Consolidated Condensed Statements of Cash Flows for the Nine months Ended March 31, 2024 and 2023 (Unaudited)	3
	Consolidated Condensed Statements of Stockholders’ Equity for the Three and Nine months Ended March 31, 2024 and 2023 (Unaudited)	4
	Notes to Consolidated Condensed Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 5.	Other Information	26

Item 6.	Exhibits	26

Signatures		27

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

REPOSITRAK, INC.

Consolidated Condensed Balance Sheets (Unaudited)

	March 31, 2024			June 30, 2023
*Assets*
Current Assets
Cash and cash equivalents	$	24,452,680		$	23,990,879
Receivables, net of allowance for doubtful accounts of $226,198 and $170,103 at March 31, 2024 and June 30, 2023, respectively		3,776,472			2,523,019
Contract asset – unbilled current portion		147,520			186,959
Prepaid expense and other current assets		451,041			573,763
Total Current Assets		28,827,713			27,274,620

Property and Equipment, net		591,724			986,300

Other Assets:
Deposits and other assets		22,414			22,414
Prepaid expense – less current portion		6,677			36,282
Contract asset – unbilled long-term portion		108,052			108,052
Operating lease – right-of-use asset		265,726			310,796
Customer relationships		164,250			262,800
Goodwill		20,883,886			20,883,886
Capitalized software costs, net		463,036			698,281
Total Other Assets		21,914,041			22,322,511

Total Assets	$	51,333,478		$	50,583,431

*Liabilities and Shareholders’ Equity*
Current Liabilities
Accounts payable	$	510,412		$	431,387
Accrued liabilities		1,390,232			1,620,000
Contract liability – deferred revenue		2,466,262			1,903,001
Operating lease liability – current		62,725			58,771
Notes payable and financing leases – current		215,274			219,262
Total Current Liabilities		4,644,905			4,232,421

Long-Term Liabilities
Operating lease liability – less current portion		215,676			263,047
Notes payable and financing leases – less current portion		-			206,032
Total Liabilities		4,860,581			4,701,500

Commitments and Contingencies

Stockholders’ Equity:
Preferred Stock; $0.01 par value, 30,000,000 shares authorized;
Series B Preferred, 700,000 shares authorized; 625,375 shares issued and outstanding at March 31, 2024 and June 30, 2023;		6,254			6,254
Series B-1 Preferred, 550,000 shares authorized; 72,216 and 212,402 shares issued and outstanding at March 31, 2024 and June 30, 2023, respectively		722			2,124
Common Stock, $0.01 par value, 50,000,000 shares authorized; 18,221,527 and 18,309,051 issued and outstanding at March 31, 2024 and June 30, 2023, respectively		182,218			183,093
Additional paid-in capital		65,277,419			67,732,887
Accumulated other comprehensive loss		(31,006	)		-
Accumulated deficit		(18,962,710	)		(22,042,427	)
Total Stockholders’ Equity		46,472,897			45,881,931
Total Liabilities and Stockholders’ Equity	$	51,333,478		$	50,583,431

See accompanying notes to consolidated condensed financial statements.

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REPOSITRAK, INC.

Consolidated Condensed Statements of Operations and Comprehensive Income (Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2024			2023			2024			2023

Revenue	$	5,084,866		$	4,824,101		$	15,270,729		$	14,295,091

Operating expense:
Cost of services and product support		831,912			840,272			2,571,533			2,539,618
Sales and marketing		1,349,838			1,239,946			4,119,716			3,667,017
General and administrative		1,352,197			916,237			3,978,798			3,392,056
Depreciation and amortization		288,576			305,864			897,479			771,030
Total operating expense		3,822,523			3,302,319			11,567,526			10,369,721

Income from operations		1,262,343			1,521,782			3,703,203			3,925,370

Other income (expense):
Interest income		350,691			275,941			925,297			554,299
Interest expense		(8,036	)		(9,771	)		(21,956	)		(52,481	)
Unrealized gain (loss) on short term investments		5,429			35,068			48,071			(3,753	)
Other gain		-			-			-			70,047
Income before income taxes		1,610,427			1,823,020			4,654,615			4,493,482

(Provision) for income taxes:		(60,000	)		(160,000	)		(274,491	)		(280,006	)
Net income		1,550,427			1,663,020			4,380,124			4,213,476

Dividends on preferred stock		(134,345	)		(146,611	)		(427,567	)		(439,833	)

Net income applicable to common shareholders	$	1,416,082		$	1,516,409		$	3,952,557		$	3,773,643

Weighted average shares, basic		18,194,000			18,394,000			18,194,000			18,408,000
Weighted average shares, diluted		18,954,000			18,751,000			18,874,000			18,702,000
Basic income per share	$	0.08		$	0.08		$	0.22		$	0.20
Diluted income per share	$	0.08		$	0.08		$	0.21		$	0.20
Comprehensive income:
Net income	$	1,550,427			1,663,020			4,380,124			4,213,476
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(25,102	)		-			(31,006	)		-

Total comprehensive income	$	1,525,325			1,663,020			4,349,118			4,213,476

See accompanying notes to consolidated condensed financial statements.

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REPOSITRAK, INC.

Consolidated Condensed Statements of Cash Flows (Unaudited)

	Nine months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net income	$	4,380,124		$	4,213,476
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		897,479			771,030
Amortization of operating right-of-use asset		45,070			43,019
Stock compensation expense		260,853			315,216
Bad debt expense		225,000			1,200,000
(Increase) decrease in:
Accounts receivables		(1,439,014	)		86,972
Long-term receivables, prepaids and other assets		751			655,391
Increase (decrease) in:
Accounts payable		79,025			(309,812	)
Operating lease liability		(43,417	)		(39,777	)

Accrued liabilities		(58,391	)		122,744
Deferred revenue		563,261			7,631
Net cash provided by operating activities		4,910,741			7,065,890

Cash flows from investing activities:
Purchase of property and equipment		(17,532	)		(133,944	)
Capitalization of software costs		-			(769,243	)
Purchase of marketable securities		(31,006	)		-
Net cash (used in) investing activities		(48,538	)		(903,187	)

Cash flows from financing activities:
Net (decrease) in lines of credit		-			(2,590,907	)
Common Stock buyback/retirement		(1,515,574	)		(981,194	)
Redemption of series B-1 preferred		(1,499,990	)		-
Proceeds from employee stock plan		111,839			92,728
Dividends paid		(1,286,657	)		(993,037	)
Payments on notes payable and capital leases		(210,020	)		(209,748	)
Net cash used in financing activities		(4,400,402	)		(4,682,158	)

Net increase (decrease) in cash and cash equivalents		461,801			1,480,545

Cash and cash equivalents at beginning of period		23,990,879			21,460,948
Cash and cash equivalents at end of period	$	24,452,680		$	22,941,493

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	317,944		$	264,486
Cash paid for interest	$	11,711		$	52,481
Cash paid for operating leases	$	54,606		$	53,015

Supplemental disclosure of non-cash investing and financing activities:
Common stock to pay accrued liabilities	$	445,980		$	256,977
Dividends accrued on preferred stock	$	427,567		$	439,833

See accompanying notes to consolidated condensed financial statements.

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REPOSITRAK, INC.

Consolidated Condensed Statements of Stockholders’ Equity (Deficit) (Unaudited)

Nine months Ended March 31, 2024

	Series B Preferred Stock				Series B-1 Preferred Stock						Common Stock						Additional Paid-In			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Shares			Amount			Shares			Amount			Capital			Deficit			Loss			Total

Balance, June 30, 2023		625,375	$	6,254		212,402		$	2,124			18,309,051		$	183,093		$	67,732,887		$	(22,042,427	)		-		$	45,881,931
Stock issued for:
Accrued compensation		-		-		-			-			3,716			37			37,463			-			-			37,500
Employee stock plan		-		-		-			-			13,326			133			57,610			-			-			57,743
Stock buyback		-		-		-			-			(155,025	)		(1,550	)		(1,320,532	)		-			-			(1,322,082	)
Preferred Dividends-Declared		-		-		-			-			-			-			-			(146,611	)		-			(146,611	)
Common Stock Dividends-Declared		-		-		-			-			-			-			-			(272,566	)		-			(272,566	)
Net income		-		-		-			-			-			-			-			1,378,548			-			1,378,548
Balance, September 30, 2023		625,375	$	6,254		212,402		$	2,124			18,171,068		$	181,713		$	66,507,428		$	(21,083,056	)	$	-		$	45,614,463
Stock issued for:
Accrued compensation		-		-		-			-			9,674			97			72,403			-			-			72,500
Employee stock plan		-		-		-			-			-			-			-			-			-			-
Stock buyback		-		-		-			-			(22,012	)		(220	)		(193,272	)		-			-			(193,492	)
Preferred Stock redemption		-		-		(70,093	)		(701	)		-			-			(749,294	)		-			-			(749,995	)
Preferred Dividends-Declared		-		-		-			-			-			-			-			(146,611	)		-			(146,611	)
Common Stock Dividends-Declared		-		-		-			-			-			-			-			(299,619	)		-			(299,619	)
Net income		-		-		-			-			-			-			-			1,451,149			-			1,451,149
Other comprehensive loss		-		-		-			-			-			-			-			-			(5,904	)		(5,904	)
Balance, December 31, 2023		625,375	$	6,254		142,309		$	1,423			18,158,730		$	181,590		$	65,637,265		$	(20,078,137	)	$	(5,904	)	$	45,742,491
Stock issued for:
Accrued compensation												56,488			565			335,415									335,980
Employee stock plan												6,309			63			54,033									54,096
Stock buyback																											-
Preferred Stock redemption						(70,093	)		(701	)								(749,294	)								(749,995	)
Preferred Dividends-Declared																					(134,345	)					(134,345	)
Common Stock Dividends-Declared																					(300,655	)					(300,655	)
Net income																					1,550,427						1,550,427
Other comprehensive loss																								(25,102	)		(25,102	)
Balance, March 31, 2024		625,375	$	6,254		72,216		$	722			18,221,527		$	182,218		$	65,277,419		$	(18,962,710	)	$	(31,006	)	$	46,472,897

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Nine months Ended March 31, 2023

	Series B Preferred Stock				Series B-1 Preferred Stock				Common Stock						Additional Paid-In			Accumulated
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Total

Balance, June 30, 2022		625,375	$	6,254		212,402	$	2,124		18,460,538		$	184,608		$	68,653,361		$	(25,943,287	)	$	42,903,060
Stock issued for:
Accrued compensation		-		-		-		-		15,603			156			76,717			-			76,873
Employee stock plan		-		-		-		-		13,064			131			48,772			-			48,903
Stock buyback		-		-		-		-		(20,859	)		(209	)		(103,448	)		-			(103,657	)
Preferred Dividends-Declared		-		-		-		-		-			-			-			(146,611	)		(146,611	)
Common Stock Dividends-Declared		-		-		-		-		-			-			-			(277,162	)		(277,162	)
Net income		-		-		-		-		-			-			-			1,285,112			1,285,112
Balance, September 30, 2022		625,375	$	6,254		212,402	$	2,124		18,468,346		$	184,686		$	68,675,402		$	(25,081,948	)	$	43,786,518

Stock issued for:
Accrued compensation		-		-		-		-		14,691			147			75,175			-			75,322
Stock buyback		-		-		-		-		(88,741	)		(888	)		(447,378	)		-			(448,266	)
Preferred Dividends-Declared		-		-		-		-		-			-			-			(146,611	)		(146,611	)
Common Stock Dividends-Declared		-		-		-		-		-			-			-			(275,914	)		(275,914	)
Net income		-		-		-		-		-			-			-			1,265,344			1,265,344
Balance, December 31, 2022		625,375	$	6,254		212,402	$	2,124		18,394,296		$	183,945		$	68,303,199		$	(24,239,129	)	$	44,256,393

Stock issued for:
Accrued compensation		-		-		-		-		19,036			190			104,592			-			104,782
Employee stock plan		-		-		-		-		11,583			116			43,709			-			43,825
Stock buyback		-		-		-		-		(74,150	)		(741	)		(428,530	)		-			(429,271	)
Preferred Dividends-Declared		-		-		-		-		-			-			-			(146,611	)		(146,611	)
Common Stock Dividends-Declared		-		-		-		-		-			-			-			(275,261	)		(275,261	)
Net income		-		-		-		-		-			-			-			1,663,020			1,663,020
Balance, March 31, 2023		625,375	$	6,254		212,402	$	2,124		18,350,765		$	183,510		$	68,022,970		$	(22,997,981	)	$	45,216,877

See accompanying notes to consolidated condensed financial statements.

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REPOSITRAK, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.

OVERVIEW OF OPERATIONS AND BASIS FOR PRESENTATION

Overview

ReposiTrak, Inc., a Nevada corporation (“ReposiTrak”, “We”, “us”, “our” or the “Company”) is a Software-as-a-Service (“SaaS”) which operates a business-to-business (“B2B”) e-commerce, compliance & traceability, and supply chain management platform that partners with retailers, wholesalers, distributors and their product suppliers to (a) help them manage specific programs, such as out-of-stock management and scan-based trading; (b) reduce risk in their supply chain by managing compliance documents and data; ensure compliance with new regulatory requirements supporting traceability; and (c) improve product ordering and forecasting in order to accelerate sales, control risks, and improve supply chain efficiencies.

The Company’s services are grouped in three application suites:

	1.	ReposiTrak Compliance Management (“Compliance”) solutions, which helps the Company’s customers vet suppliers and reduce a company’s potential regulatory, legal, and criminal risk from its supply chain partners by providing a way for them to ensure these suppliers are compliant with food safety regulations, such as the Food Safety Modernization Act of 2011 (“FSMA”);

	2.	ReposiTrak Traceability Network (“Traceability” or “RTN”), which helps the Company’s customers comply with federal regulatory requirements of traceability and provides the lowest cost, easiest to use way to manage the capture and sharing of key data elements (“KDEs”) now required by Section 204d of FSMA 2011 as designated products move through the supply chain at each ‘event’ known as a ‘critical tracking event’ or “CTE”, which includes tracking from farm to shelf; and

	3.	ReposiTrak Supply Chain Solutions (“Supply Chain”), which help the Company’s customers to more efficiently manage various interactions with their suppliers. In other words, it provides customers with greater flexibility in sourcing products by enabling them to choose new suppliers and integrate them into their supply chain faster and more cost effectively, and it helps them to manage these relationships more efficiently, enhancing revenue while lowering working capital, labor costs and reducing waste.

The Company’s services are delivered though proprietary software products designed, developed, marketed, and supported by the Company. These products provide visibility and facilitate improved business processes among all key constituents in the supply chain, starting with the retailer and moving backwards to suppliers and eventually to raw material providers.

The Company provides cloud-based applications and services that address e-commerce, supply chain, food safety, compliance and traceability activities. The principal customers for the Company’s products are household name multi-store food retail chains and restaurants including their suppliers, branded food manufacturers, food wholesalers and distributors, and other food service businesses.

The Company has a hub and spoke business model. The Company is typically engaged by retailers and wholesalers (“Hubs”), which in turn require their suppliers (“Spokes”) to utilize the Company’s services.

On December 21, 2023, the Company effected a change of its corporate name from Park City Group, Inc. to ReposiTrak, Inc. The Company is incorporated in the State of Nevada and has two principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned) (“PCG Utah”) and Park City Group, Inc., a Delaware corporation (100% owned) (“PCG Delaware” and together with PCG Utah, the “Subsidiaries”). All intercompany transactions and balances have been eliminated in the Company’s consolidated financial statements, which contain the operating results of the operations. The Company has no business operations separate from the operations conducted through its Subsidiaries.

The Company’s principal executive offices are located at 5282 South Commerce Drive, Suite D292, Murray, Utah 84107. Its telephone number is (435) 645-2000. Its website address is www.repositrak.com.

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Basis of Financial Statement Presentation

The interim financial information of the Company as of March 31, 2024 and for the three and nine months ended March 31, 2024 is unaudited, and the balance sheet as of June 30, 2023 is derived from audited financial statements. The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. GAAP. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended June 30, 2023. In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the nine months ended March 31, 2024 are not necessarily indicative of the results that can be expected for the fiscal year ending June 30, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2023.

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The financial statements presented herein reflect the consolidated financial position of ReposiTrak, Inc. and our subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates. The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its financial statements. The U.S. Securities and Exchange Commission (“SEC”) has defined the most critical accounting policies as those that are most important to the portrayal of the Company’s financial condition and results and require the Company to make its most difficult and subjective judgments, often because of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include revenue recognition, goodwill, other long-lived asset valuations, income taxes, stock-based compensation, and capitalization of software development costs.

Revenue Recognition

The Company recognizes revenue as it transfers control of deliverables (products, solutions and services) to its customers in an amount reflecting the consideration to which it expects to be entitled. To recognize revenue, the Company applies the following five step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when a performance obligation is satisfied. The Company accounts for a contract based on the terms and conditions the parties agree to, if the contract has commercial substance and if collectability of consideration is probable. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience.

The Company may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of its deliverables. To the extent a contract includes multiple promised deliverables, the Company applies judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, the Company allocates consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised good or service separately to the customer. When not directly observable, the Company typically estimates standalone selling price by using the expected cost plus a margin approach. The Company typically establishes a standalone selling price range for its deliverables, which is reassessed on a periodic basis or when facts and circumstances change.

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For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in FASB ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), paragraph 606-10-55-18 (“ASC 606-10-55-18”).

If the Company’s invoicing is not consistent with the value delivered, revenue is recognized as the service is performed based on the method described above. The output method measures the results achieved and value transferred to a customer, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenue related to fixed-price hosting and infrastructure services is recognized based on the Company’s right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If the Company’s invoicing is not consistent with value delivered, revenue is recognized on a straight-line basis unless revenue is earned and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described above provides the most faithful depiction of performance towards satisfaction of the Company’s performance obligations.

Revenue related to the Company’s software license arrangements that do not require significant modification or customization of the underlying software is recognized when the software is delivered as control is transferred at a point in time. For software license arrangements that require significant functionality enhancements or modification of the software, revenue for the software license and related services is recognized as the services are performed in accordance with the methods described above. In software hosting arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a service. Revenue related to software maintenance and support is generally recognized on a straight-line basis over the contract period.

Management expects that incremental commission fees paid as a result of obtaining a contract are recoverable and therefore the Company capitalized them as contract costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Revenue related to transaction-based or volume-based contracts is recognized over the period the services are provided in a manner that corresponds with the value transferred to the customer to-date relative to the remaining services to be provided.

From time to time, the Company may enter into arrangements with third party suppliers to resell products or services. In such cases, the Company evaluates whether the Company is the principal (i.e., report revenue on a gross basis) or agent (i.e., report revenue on a net basis). In doing so, the Company first evaluates whether it controls the good or service before it is transferred to the customer. If the Company controls the good or service before it is transferred to the customer, the Company is the principal; if not, the Company is the agent. Determining whether the Company controls the good or service before it is transferred to the customer may require judgment.

The Company provides customers with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications. General updates or patch fixes are not considered an additional performance obligation in the contract.

Variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration to which we may be entitled. The Company includes in the transaction price variable consideration only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and is based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company.

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The Company assesses the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its services, not to receive or provide financing from or to customers. The Company does not consider set up or transition fees paid upfront by its customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract.

Trade Accounts Receivable and Contract Balances

We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset (unbilled receivable). A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, we recognize a receivable for revenue related to our transaction or volume-based contracts when earned regardless of whether amounts have been billed. We present such receivables in trade accounts receivable, net in our consolidated statements of financial position at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables, judgment, and other applicable factors.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in current and other assets in our consolidated balance sheets and primarily relate to unbilled amounts on fixed-price contracts utilizing the output method of revenue recognition. The table below shows movements in contract assets:

	Contract assets
Balance – June 30, 2023	$	295,011
Revenue recognized during the period but not billed		-
Amounts reclassified to accounts receivable		(10,000	)
Other		(29,439	)
Balance – March 31, 2024	$	255,572	⁽¹⁾

⁽¹⁾

Contract asset balances for March 31, 2024 include a current and a long-term contract asset of $147,520 and $108,052, respectively.

Our contract assets and liabilities are reported at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type.

The table below shows movements in the deferred revenue balances (current and noncurrent) for the period:

	Contract liability
Balance – June 30, 2023	$	1,903,001
Amounts billed but not recognized as revenue		1,767,483
Revenue recognized related to the opening balance of deferred revenue		(1,204,222	)
Balance – March 31, 2024	$	2,466,262

Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenue primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which may vary generally by contract type.

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Disaggregation of Revenue

The table below presents disaggregated revenue from contracts with customers by contract-type. We believe this disaggregation best depicts the nature, amount, timing and uncertainty of our revenue and cash flows that may be affected by industry, market, and other economic factors:

	Three Months Ended				Nine months Ended
	March 31,				March 31,
	2024		2023		2024		2023

Recurring revenue – subscription and support services	$	5,078,866	$	4,811,634	$	15,250,302	$	14,232,827
Non-recurring revenue – setup and training services		6,000		12,467		20,427		62,264
	$	5,084,866	$	4,824,101	$	15,270,729	$	14,295,091

Earnings Per Share

Basic net income per share of Common Stock (“Basic EPS”) excludes dilution and is computed by dividing net income applicable to Common Stockholders by the weighted average number of Common Stock outstanding during the period. Diluted net income per share of Common Stock (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue shares of Common Stock were exercised or converted into Common Stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an antidilutive effect on net income per share of Common Stock.

For the three and nine months ended March 31, 2024 and 2023, warrants to purchase 23,737 shares of our common stock at an exercise price of $10.00 per share were anti-dilutive and not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average price of common stock for the quarter.

The following table presents the components of the computation of basic and diluted earnings per share for the periods indicated:

	Three Months Ended				Nine months Ended
	March 31,				March 31,
	2024		2024		2023		2023
Numerator
Net income applicable to common shareholders	$	1,416,082	$	1,516,409	$	3,952,557	$	3,773,643

Denominator
Weighted average common shares outstanding, basic		18,194,000		18,394,000		18,194,000		18,408,000
Warrants to purchase Common Stock		760,000		357,000		680,000		294,000
Weighted average common shares outstanding, diluted		18,954,000		18,751,000		18,874,000		18,702,000

Net income per share
Basic	$	0.08	$	0.08	$	0.22	$	0.20
Diluted	$	0.08	$	0.08	$	0.21	$	0.20

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year’s presentation. These reclassifications have no impact on the previously reported results.

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NOTE 3.

EQUITY

Restricted Stock Units	Restricted Stock Units			Weighted Average Grant Date Fair Value ($/share)

Outstanding at June 30, 2023		907,451		$	5.30
Granted		15,130			10.55
Vested and issued		(58,437	)		5.66
Forfeited		-			-
Outstanding at March 31, 2024		864,144		$	5.37

As of March 31, 2024, there were zero restricted stock units outstanding that had vested but for which shares of Common Stock had not yet been issued pursuant to the terms of the applicable agreement.

As of March 31, 2024, there was approximately $4.6 million of unrecognized stock-based compensation obligations under our equity compensation plans. The stock-based compensation obligation is in connection with certain employment agreements which have a deferral option at the Board’s discretion. At the end of the deferral period, the stock-based compensation expense associated with the obligation is expected to be recognized on a straight-line basis over a period of three years.

Warrants

Outstanding warrants were issued in connection with private placements of the Company’s Common Stock and with the restructuring of the Series B Preferred that occurred in March of 2018. The following table summarizes information about fixed stock warrants outstanding at March 31, 2024:

Warrants Outstanding at March 31, 2024								Warrants Exercisable at March 31, 2024
Range of exercise prices		Number Outstanding		Weighted average remaining contractual life (years)		Weighted average exercise price		Number exercisable		Weighted average exercise price
$	4.00		1,085,068		1.85	$	4.00		1,085,068	$	4.00
$	10.00		23,737		1.82	$	10.00		23,737	$	10.00
			1,108,805		1.85	$	4.13		1,108,805	$	4.13

During the quarter ended March 31, 2023, the Company’s Board of Directors approved the modification to extend the expiration dates of the Company’s existing January 26, 2023 and February 5, 2023 warrants by an additional three years. Accordingly, all the Company’s outstanding warrants have been extended and are anticipated to expire or be exercised on or before the quarter ending March 31, 2026.

Preferred Stock

The Company’s articles of incorporation currently authorize the issuance of up to 30,000,000 shares of ‘blank check’ preferred stock, par value $0.01 (“Preferred Stock”), with designations, rights, and preferences as may be determined from time to time by the Company’s Board of Directors, of which 700,000 shares are currently designated as Series B Preferred Stock (“Series B Preferred”) and 550,000 shares are designated as Series B-1 Preferred Stock (“Series B-1 Preferred”). Both classes of Series B Preferred Stock pay dividends at a rate of 7% per annum if paid by the Company in cash, or 9% if paid by the Company by the issuance of additional shares of Series B-1 Preferred, or Series B-1 Preferred, as applicable.

Preferred Redemption

Section 4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “Series B-1 COD”) provides the Company’s Board of Directors with the right to redeem any or all of the outstanding shares of the Company’s Series B-1 Preferred for a cash payment of $10.70 per share at any time upon providing the holders of Series B-1 Preferred at least ten days written notice that sets forth the date on which the redemption will occur (the “Redemption Notice”).

On August 29, 2023, the Board approved the redemption and retirement of its Series B Preferred and Series B-1 Preferred for their stated value, or $10.70 for each share of Preferred Stock, resulting in an aggregate purchase price of $8,964,214 (the “Preferred Redemption”). The Preferred Redemption is to occur over the next three years from August 29, 2023.

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As of March 31, 2024, a total of 625,375 shares of Series B Preferred and 72,216 shares of Series B-1 Preferred were issued and outstanding. Since inception, a total of 140,186 Preferred shares at the redemption price of $10.70 per share have been redeemed for a total of $1,499,990.

The following table provides information about the redemption and retirement of the Series B Preferred during the nine months ended March 31, 2024:

	Series B Preferred
Period ⁽¹⁾	Total Number of Shares Redeemed		Price Paid Per Share		Dollars Expended by Period under the Preferred Redemption		Remaining Amount Available for Future Preferred Redemption
July 1, 2023 – September 30, 2023:		-	$	10.70	$	-	$
October 1, 2023 – December 31, 2023:		-	$	10.70	$	-	$	6,691,513
January 1, 2024 – March 31, 2024:		-	$	10.70	$	-	$	6,691,513
Total		-			$	-	$	6,691,513

The following table provides information about the redemption and retirement of the Series B-1 Preferred during the three months ended March 31, 2024:

	Series B-1 Preferred
Period ⁽¹⁾	Total Number of Shares Redeemed		Price Paid Per Share		Dollars Expended by Period under the Preferred Redemption		Remaining Amount Available for Future Preferred Redemption
July 1, 2023 – September 30, 2023:		-	$	10.70	$	-	$
October 1, 2023 – December 31, 2023:		70,093	$	10.70	$	749,995	$	1,522,706
January 1, 2024 – March 31, 2024:		70,093	$	10.70	$	749,995	$	772,711
Total		140,186			$	1,499,990	$	772,711

⁽¹⁾	We close our books and records on the last calendar day of each month to align our financial closing with our business processes.

Share Repurchase Program

On May 9, 2019, our Board of Directors approved the repurchase of up to $4.0 million in shares of our Common Stock, which repurchases may be made in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices (the “Share Repurchase Program”). Under the Share Repurchase Program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable laws and regulations, including Rule 10b-18 of the Exchange Act.

On March 17, 2020, the Board, given the extreme uncertainty due to COVID-19 at the time, suspended the Share Repurchase Program.

On May 18, 2021, our Board of Directors resumed its Share Repurchase Program, and increased the number of shares of Common Stock available to repurchase under the Share Repurchase Program by an additional $4 million bringing the total number of Common Stock authorized to repurchase under the Share Repurchase Program to $8.0 million.

On August 31, 2021, our Board of Directors approved a further increase to its Share Repurchase program to $12.0 million in shares of our Common Stock which added an additional $4 million to the Share Repurchase Program.

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On May 10, 2022, our Board of Directors approved an increase of $9.0 million in the number of shares of Common Stock available to repurchase under the Share Repurchase Program.

Since inception of the Share Repurchase Program through March 31, 2024, a total of $21,000,000 in shares of Common Stock have been approved under the Share Repurchase Program, and 2,122,703 shares of Common Stock have been repurchased at an average purchase price of $6.13, resulting in $7,992,206 remaining available to repurchase under the current Share Repurchase Program. From time-to-time, our Board of Directors may authorize further increases to our Share Repurchase Program. In addition, the Share Repurchase Program may also be suspended for periods of time or discontinued at any time, at the Board’s discretion.

The following table provides information about repurchases of our Common Stock registered pursuant to Section 12 of the Exchange Act, during the three months ended March 31, 2024:

Period ⁽¹⁾	Total Number of Shares Purchased		Average Price Paid Per Share		Dollars Expended by Period Under the Plans or Programs		Remaining Amount Available for Future Share Repurchases Under the Plans or Programs
July 1, 2023 – September 30, 2023		155,025	$	8.53	$	1,322,082	$	8,185,698
October 1, 2023 – December 31, 2023:		22,012	$	8.79	$	193,492	$	7,992,206
January 1, 2024 – March 31, 2024:		-	$	-	$	-	$	7,992,206

⁽¹⁾	We close our books and records on the last calendar day of each month to align our financial closing with our business processes.

NOTE 4.

RELATED PARTY TRANSACTIONS

During the nine months ended March 31, 2024, the Company continued to be a party to a service agreement (the “Service Agreement”) with Fields Management, Inc. (“FMI”), pursuant to which FMI provided certain executive management services to the Company, including designating Randall K. Fields to perform the functions of President and Chief Executive Officer for the Company. Mr. Fields, FMI’s designated executive, who also serves as the Company’s Chair of the Board of Directors, controls FMI. The Company had no payables to FMI under the Service Agreement as of March 31, 2024 or June 30, 2023. During the nine months ended March 31, 2024 and 2023, the Company paid FMI $727,352 and $693,045, respectively, in connection with the Service Agreement.

During the nine months ended March 31, 2024, the Company, the Company redeemed and retired $1,499,990 in Series B-1 Preferred from Mr. Randall K. Fields, affiliates of Mr. Fields, and Robert W. Allen. Mr. Allen is a director of the Company.

NOTE 5.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company has reviewed newly issued accounting pronouncements and concluded that they are either not applicable to its business or that no material effect is expected on its consolidated condensed financial statements as a result of future adoption.

NOTE 6.

SUBSEQUENT EVENTS

In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events through the filing date and determined that no subsequent events occurred that were reasonably expected to impact the consolidated condensed financial statements presented herein.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements. The words or phrases “would be”, “will allow”, “intends to”, “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, “project”, or similar expressions are intended to identify “forward-looking statements”. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including those risks factors contained in our June 30, 2023 Annual Report on Form 10-K, incorporated by reference herein. Statements made herein are as of the date of the filing of this Report with the Securities and Exchange Commission (“SEC”) and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

Overview

ReposiTrak, Inc., a Nevada corporation (“ReposiTrak”, “We”, “us”, “our” or the “Company”) is a Software-as-a-Service (“SaaS”) which operates a business-to-business (“B2B”) e-commerce, compliance & traceability, and supply chain management platform that partners with retailers, wholesalers, distributors and their product suppliers to (a) help them manage specific programs, such as out-of-stock management and scan-based trading; (b) reduce risk in their supply chain by managing compliance documents and data; ensure compliance with new regulatory requirements supporting traceability; and (c) improve product ordering and forecasting in order to accelerate sales, control risks, and improve supply chain efficiencies.

The Company’s services are grouped in three application suites:

	1.	ReposiTrak Compliance Management (“Compliance”) solutions, which helps the Company’s customers vet suppliers and reduce a company’s potential regulatory, legal, and criminal risk from its supply chain partners by providing a way for them to ensure these suppliers are compliant with food safety regulations, such as the Food Safety Modernization Act of 2011 (“FSMA”);

	2.	ReposiTrak Traceability Network (“Traceability” or “RTN”), which helps the Company’s customers comply with federal regulatory requirements of traceability and provides the lowest cost, easiest to use way to manage the capture and sharing of key data elements (KDEs) now required by Section 204d of FSMA 2011 as designated products move through the supply chain at each ‘event’ known as a ‘critical tracking event’ or “CTE”, which includes tracking from farm to shelf; and

	3.	ReposiTrak Supply Chain Solutions (“Supply Chain”), which help the Company’s customers to more efficiently manage various interactions with their suppliers. In other words, it provides customers with greater flexibility in sourcing products by enabling them to choose new suppliers and integrate them into their supply chain faster and more cost effectively, and it helps them to manage these relationships more efficiently, enhancing revenue while lowering working capital, labor costs and reducing waste.

The Company provides cloud-based applications and services that address e-commerce, supply chain, food safety, compliance, and traceability activities. The principal customers for the Company’s products are household name multi-store food retail chains and restaurants including their suppliers, branded food manufacturers, food wholesalers and distributors, and other food service businesses.

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On December 21, 2023, the Company effected a change of its corporate name from Park City Group, Inc. to ReposiTrak, Inc. The Company is incorporated in the State of Nevada and has two principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned) (“PCG Utah”) and Park City Group, Inc., a Delaware corporation (100% owned) (“PCG Delaware” and together with PCG Utah, the “Subsidiaries”). All intercompany transactions and balances have been eliminated in the Company’s consolidated condensed financial statements, which contain the operating results of the operations. The Company has no business operations separate from the operations conducted through its Subsidiaries.

Recent Developments

Corporate Name Change

In connection with the rebranding of the Company, on December 21, 2023, the Company effected a change of its corporate name from Park City Group, Inc. to ReposiTrak, Inc., pursuant to a short-form merger with its wholly owned subsidiary, ReposiTrak, Inc., a Utah corporation, with the Company remaining as the surviving entity.

Transfer of listing from NASDAQ to NYSE

The Company filed a Registration Statement on Form 8-A in connection with the transfer of the listing of its common stock, par value $0.01 per share (“Common Stock”), from the Nasdaq Capital Market of The Nasdaq Stock Market LLC (“Nasdaq”) to the New York Stock Exchange (the “NYSE”). The Company commenced the trading of its Common Stock on the NYSE on November 2, 2023 under the symbol “TRAK.” Trading on the Nasdaq Capital Market ceased concurrently with the NYSE listing.

Dividend Payment

On March 18, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.0165 per share ($0.066 per year), payable to shareholders of record on March 28, 2024, which were paid to shareholders of record on or about May 10, 2024. Based on the closing prices on March 31, 2024, this represented an annual dividend yield of approximately 0.42%. Subsequent quarterly dividends will be paid within 45 days of each record date of June 30, 2024, September 30, 2024 and December 31, 2024

Redemption and Retirement of Preferred Stock

As of March 31, 2024, a total of zero shares of Series B Preferred and 140,186 shares of Series B-1 Preferred were redeemed and retired, for aggregate consideration of $0 and $1,499,990 in the case of Series B Preferred and Series B-1 Preferred, respectively, resulting in a total of 625,375 shares of Series B Preferred and 72,216 shares of Series B-1 Preferred issued and outstanding at March 31, 2024.

Global Pandemics, Bank Failures, and Geopolitical Conflicts

The impact of global pandemics, including COVID 19, banking failures, geopolitical conflicts, including the war in Ukraine and tensions in the Middle East, creates much uncertainty in the global marketplace. Management continues to monitor the ongoing impact of these events on all aspects of its business, including how they impact its services, customers, employees, vendors, and business partners now and in the future. While these events did not materially adversely affect the Company’s financial results and business operations during the year ended June 30, 2023 or during the nine months ended March 31, 2024, we are unable to predict the impact that these events, including geopolitical conflicts, will have on its future financial position and operating results due to numerous uncertainties.

Federal Regulation & Traceability: FSMA 204(d) and USDA SOE

In 2020, the United States Food & Drug Administration (“FDA”) announced the “New Era of Smarter Food Safety” blueprint. It “outlines achievable goals to enhance traceability, improve predictive analytics, respond more rapidly to outbreaks, address new business models, reduce contamination of food, and foster the development of stronger food safety cultures.”

In November 2022, the FDA announced the final rule on the Food Safety Modernization Act Section 204(d) (“FSMA 204”) - Traceability for High-Risk Foods.

On January 20, 2023, the rule became effective and applies to any person or Company that manufactures, processes, packs or hold foods the FDA considers to be high risk for food borne illness, the so-called Food Traceability List (“FTL”). The FTL is comprised of 16 product categories of food, which represent thousands of products commonly sold in grocery and convenience stores, and all restaurants. As a result, every grocery distributor, wholesaler and retailer, and the food service supply chain, must now institute a traceability program that enables the capture, creation and sharing of specific Key Data Elements (“KDEs”) prescribed by the FDA and required for traceability, at each designated Critical Tracking Event (“CTE”) in the supply chain, for thousands of items.

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FSMA 204 requires the traceability data records to be stored for two years, and be retrievable such that specific data records can be presented within 24 hours of a request from the FDA. FSMA 204 is ultimately about supply chain data recording record keeping, resulting is an enormous amount of data to manage, across more than one million supply chain and retail facilities.

The deadline for compliance with FSMA 204 is January 20, 2026, and nearly every company impacted will require some type of technical systems support to meet the requirement.

While the FTL includes thousands of product types, the FDA has made it clear in its communications that the list is only the beginning. The FDA states that it would “encourage the voluntary adoption of these practices industry-wide,” There are some strong early indications that the industry will move to complete traceability of all food products within the next few years.

In January of 2023, the United States Department of Agriculture (the “USDA”), which governs the National Organic Program, instituted new requirements under the Strengthening Organic Enforcement (“SOE”) rule. This rule will be enforced beginning in March 2024. The SOE is designed to reduce the amount of fraud in the organic products industry by increasing the requirements for facility certification and traceability of organic products. The timing and scope of the SOE traceability requirement will accelerate the adoption of traceability solutions across the entire food supply chain, much sooner than many anticipated.

In December 2023, one of the largest grocery retail chains in the US sent their suppliers a communication detailing their new traceability program requirements for ALL food products, not just the FDA required foods, with a deadline for compliance of June 2025, significantly earlier than the FDA FSMA 204 compliance deadline. It’s estimated that this new requirement could impact up to 20,000 food companies. If history is any indicator, we expect other large chains will follow the precedent set by this industry leader, resulting in effectively every supplier of food products sold in the United States will have the ability to simply and cost effectively share traceability data with their customers.

Traceability is, by definition, a supply chain data management issue, which is ReposiTrak’s core expertise. That’s why we’ve made it our goal to develop a traceability solution that’s easy, inexpensive and exceeds FDA’s requirements. The ReposiTrak Traceability Network (“RTN”) is now the largest and fastest growing traceability solution, connecting thousands of supplier locations to thousands of food wholesaler and retail locations, using low cost, easy to deploy technology, on the ReposiTrak platform. As the largest connected network of food suppliers, wholesalers and retailers in the world, the ReposiTrak Traceability Network is well positioned to provide end-to-end traceability to provide a safer food supply chain, tighten controls on food waste, and implement a food recall response that saves lives and money.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023.

Revenue

Fiscal Quarter Ended

March 31,

Variance

2024

2023

Dollars

Percent

Revenue

5,084,866

4,824,101

260,765

Revenue was $5,084,866 and $4,824,101 for the three months ended March 31, 2024 and 2023, respectively, a 5% increase year-over-year. The increase in revenue was due to growth in recurring subscription revenue, in all lines of business which includes compliance, supply chain and traceability. This is the result of growing industry and consumer response to food contaminations and food safety hazards, whether biological, chemical, physical, or allergenic. The risks have elevated regulatory requirements, documentation requisites, and principally “where does your food come from” transparency on grocery retailers and their suppliers. As more and more retailers, wholesalers and distributors adopt the increased regulatory disclosure requirements, the Company has seen a corresponding rise in demand for its services.

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Although no assurances can be given, we continue to focus our sales efforts on marketing our software services on a recurring subscription basis and placing less emphasis on transactional revenue. However, we believe there will continue to be a small percentage of customers that will, from time to time, require buying a particular service outright (i.e., a license). Nonetheless, we will continue to deemphasize non-recurring transactional revenue when we are able.

Cost of Services and Product Support

	Fiscal Quarter Ended March 31,						Variance
	2024			2023			Dollars			Percent
Cost of services and product support	$	831,912		$	840,272		$	(8,360	)		-1	%
Percent of total revenue		16	%		17	%

Cost of services and product support was $831,912 and $840,272 for the three months ended March 31, 2024 and 2023, respectively, a 1% decrease. This $8,360 decrease is primarily the result of the decrease of certain hardware and software support and maintenance costs.

Sales and Marketing Expense

Fiscal Quarter Ended

March 31,

Variance