[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) ReposiTrak achieved strong FQ3 2025 results with double-digit revenue and net income growth, driven by cross-selling and an accelerating network effect - Growth was delivered across all business lines: traceability, compliance, and supply chain, driven by accelerated cross-selling[4](index=4&type=chunk) - The onboarding of traceability customers has shifted from primarily retailers to mostly suppliers, expanding the **Total Addressable Market (TAM)**[4](index=4&type=chunk) - Over **70%** of new traceability suppliers are now joining the ReposiTrak Traceability Network (RTN) using an automated wizard with little or no human intervention[4](index=4&type=chunk) - The 'network effect' is accelerating as larger suppliers bring smaller ingredient providers into the network, driving increased cross-selling opportunities[4](index=4&type=chunk) [Financial Results](index=1&type=section&id=Financial%20Results) This section details ReposiTrak's double-digit revenue growth and increased profitability for FQ3 and the first nine months of fiscal 2025 [Third Fiscal Quarter 2025 Results](index=1&type=section&id=Third%20Fiscal%20Quarter%202025%20Results) ReposiTrak reported FQ3 2025 total revenue of **$5.9 million**, a **16.3%** increase, with GAAP net income up **26.8%** to **$2.0 million** and diluted EPS of **$0.10** FQ3 2025 vs FQ3 2024 Financial Performance | Metric | FQ3 2025 | FQ3 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $5.9M | $5.1M | +16.3% | | Operating Income | $1.8M | $1.3M | +43% | | GAAP Net Income | $2.0M | $1.6M | +26.8% | | Net Income to Common Shareholders | $1.9M | $1.4M | +32.8% | | Diluted EPS | $0.10 | $0.08 | +25% | - **98%** of the revenue in the quarter was recurring[6](index=6&type=chunk) - The company finished the quarter with over **$28.1 million** in cash and no bank debt[6](index=6&type=chunk)[10](index=10&type=chunk) [Year-to-Date Fiscal 2025 Results](index=2&type=section&id=Year-to-Date%20Fiscal%202025%20Results) For the nine months ended March 31, 2025, total revenue grew **10.3%** to **$16.9 million**, with GAAP net income increasing **18.3%** to **$5.2 million** YTD FY2025 vs YTD FY2024 Financial Performance | Metric | Nine Months Ended 3/31/2025 | Nine Months Ended 3/31/2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $16.9M | $15.3M | +10.3% | | GAAP Net Income | $5.2M | $4.4M | +18.3% | | Net Income to Common Shareholders | $4.9M | $4.0M | +23.8% | | Diluted EPS | $0.26 | $0.21 | +23.8% | [Capital Management & Balance Sheet](index=2&type=section&id=Capital%20Management%20%26%20Balance%20Sheet) ReposiTrak continues to return capital to shareholders through preferred share redemptions and common stock dividends, maintaining a strong balance sheet with **$28.1 million** in cash - In FQ3 2025, the company redeemed **70,093** preferred shares for **$749,995**, anticipating full redemption within three years[8](index=8&type=chunk) - A quarterly dividend of **$0.01815** per share was declared on March 21, 2025[9](index=9&type=chunk) - Approximately **$7.9 million** remains under the common share buyback authorization, with no shares repurchased during the quarter[8](index=8&type=chunk) - The company's cash and cash equivalents increased by **11.9%** to **$28.1 million** at March 31, 2025, from **$25.2 million** at June 30, 2024[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited consolidated financial statements for periods ended March 31, 2025, including Balance Sheets, Statements of Operations, and Cash Flows [Consolidated Condensed Balance Sheets](index=4&type=section&id=REPOSITRAK%2C%20INC.%20Consolidated%20Condensed%20Balance%20Sheets%20%28Unaudited%29) As of March 31, 2025, ReposiTrak reported total assets of **$54.8 million** and total liabilities of **$5.9 million**, with cash increasing to **$28.1 million** Key Balance Sheet Items | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash | $28,134,321 | $25,153,862 | | Total Assets | $54,834,436 | $51,596,732 | | Total Liabilities | $5,913,370 | $4,742,114 | | Total Stockholders' Equity | $48,921,066 | $46,854,618 | [Consolidated Condensed Statements of Operations](index=5&type=section&id=REPOSITRAK%2C%20INC.%20Consolidated%20Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Unaudited%29) For the three months ended March 31, 2025, revenue was **$5.9 million** with net income of **$2.0 million**, while the nine-month period saw **$16.8 million** revenue and **$5.2 million** net income Quarterly Statement of Operations (Three Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $5,913,732 | $5,084,866 | | Income from operations | $1,808,853 | $1,262,343 | | Net income | $1,965,788 | $1,550,427 | | Diluted income per share | $0.10 | $0.08 | Year-to-Date Statement of Operations (Nine Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $16,845,782 | $15,270,729 | | Income from operations | $4,640,965 | $3,703,203 | | Net income | $5,182,023 | $4,380,124 | | Diluted income per share | $0.26 | $0.21 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=REPOSITRAK%2C%20INC.%20Consolidated%20Condensed%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) For the nine months ended March 31, 2025, net cash from operating activities was **$6.8 million**, with a **$3.0 million** increase in the cash balance Key Cash Flow Items (Nine Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,763,371 | $4,910,741 | | Net cash used in financing activities | $(3,789,227) | $(4,400,402) | | Net increase in cash | $2,980,459 | $461,801 | | Cash at end of period | $28,134,321 | $24,452,680 | [Other Information](index=2&type=section&id=Other%20Information) This section includes details for the investor conference call, a forward-looking statement disclaimer, and investor relations contact information - The company will host a conference call on Thursday, May 15, 2025, at **4:15 p.m. ET** to discuss the results[11](index=11&type=chunk)[12](index=12&type=chunk) - The report contains forward-looking statements subject to risks and uncertainties, cautioning readers against undue reliance[13](index=13&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for the third quarter of fiscal 2025 increased by 16% to $5.9 million compared to $5.1 million in the prior year [14] - GAAP net income rose from $1.6 million to $2 million, reflecting a 27% increase [16] - Earnings per share increased to $0.10 from $0.08, marking a 25% rise [17] - For the fiscal year to date, total revenue increased by 10.3% to $16.8 million [18] Business Line Data and Key Metrics Changes - Recurring revenue increased by 15% to $5.8 million, although the percentage of recurring revenue to total revenue declined from 99% to 98% due to accelerated customer onboarding [15] - Income from operations increased by 43% from $1.3 million to $1.8 million [16] - The company is experiencing growth across all lines of business, including traceability, compliance, and supply chain [11][28] Market Data and Key Metrics Changes - The FDA extended the enforcement deadline for compliance by 30 months, allowing more time for smaller distributors and producers to meet requirements [21] - Major retailers are prioritizing food safety and investing in food traceability, which is driving market adoption [23] Company Strategy and Development Direction - The company aims to grow annual revenue at a double-digit pace of 10% to 20% while increasing profitability even faster [6][28] - The strategy includes exceptional customer care, flawless execution, and balancing costs with opportunities [13][20] - The company is focused on cross-selling initiatives, leveraging a single technology platform to enhance operational efficiencies [25][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth and cash generation, with expectations to return about 50% of annual cash from operations to shareholders [30] - The company is optimistic about its ability to grow revenue and earnings, with a focus on maintaining customer service quality [29][31] Other Important Information - The company has over $28 million in cash as of March 31, 2025, after returning more than $25 million to shareholders through dividends and stock buybacks [17][20] - The company plans to continue its capital allocation strategy, focusing on returning capital to shareholders while building cash reserves [20][59] Q&A Session Summary Question: Impact of tariffs on the business - Management indicated that tariffs introduce uncertainty but have not significantly impacted business operations [33][34] Question: Changes in cost structure and profitability - Management stated that while they will continue to invest in awareness and automation, the cost structure is not expected to change significantly [35][36] Question: Contribution margin on incremental revenue - Current contribution margin is approximately 50%, with a goal to increase it to 70-80% as onboarding costs flatten [40] Question: Growth of other initiatives and cross-selling - Management highlighted that cross-selling is becoming more effective, with growth across various business lines [41][49] Question: Capital allocation plans and M&A strategy - The company prefers building applications in-house rather than acquiring technologies, focusing on domain knowledge and customer acquisition [51][52]

PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for ReposiTrak, Inc. as of March 31, 2025, show an increase in total assets to $54.8 million from $51.6 million at June 30, 2024, driven by a rise in cash [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of March 31, 2025, total assets were $54.8 million, an increase from $51.6 million on June 30, 2024, primarily driven by an increase in cash to $28.1 million, while total liabilities rose to $5.9 million and total stockholders' equity increased to $48.9 million Consolidated Condensed Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $28,134,321 | $25,153,862 | | Total Current Assets | $32,752,375 | $29,300,167 | | Goodwill | $20,883,886 | $20,883,886 | | **Total Assets** | **$54,834,436** | **$51,596,732** | | **Liabilities & Equity** | | | | Total current liabilities | $5,434,176 | $4,543,142 | | Total liabilities | $5,913,370 | $4,742,114 | | **Total stockholders' equity** | **$48,921,066** | **$46,854,618** | [Consolidated Condensed Statements of Operations and Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the three months ended March 31, 2025, revenue increased 16.3% year-over-year to $5.9 million, and net income rose to $2.0 million, while for the nine-month period, revenue grew 10.3% to $16.8 million, with net income increasing to $5.2 million and diluted EPS reaching $0.26 Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,913,732 | $5,084,866 | $16,845,782 | $15,270,729 | | Income from operations | $1,808,853 | $1,262,343 | $4,640,965 | $3,703,203 | | Net income | $1,965,788 | $1,550,427 | $5,182,023 | $4,380,124 | | Diluted income per share | $0.10 | $0.08 | $0.26 | $0.21 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2025, net cash provided by operating activities was $6.8 million, a 38% increase from the prior year, while net cash used in financing activities decreased to $3.8 million, resulting in a $3.0 million increase in cash and cash equivalents to $28.1 million Cash Flow Highlights (Unaudited, Nine Months Ended March 31) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $6,763,371 | $4,910,741 | | Net cash provided by (used in) investing activities | $6,315 | ($48,538) | | Net cash used in financing activities | ($3,789,227) | ($4,400,402) | | **Net increase in cash** | **$2,980,459** | **$461,801** | | **Cash at end of period** | **$28,134,321** | **$24,452,680** | [Notes to Consolidated Condensed Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) The notes detail the company's SaaS business model, key accounting policies including revenue recognition, equity section specifics like the share repurchase program and preferred stock redemption plan, and related party transactions - The company operates a B2B SaaS platform with three main service suites: Compliance Management, Traceability Network (RTN), and Supply Chain Solutions, primarily serving food retailers, wholesalers, and their suppliers in a hub-and-spoke model[18](index=18&type=chunk)[21](index=21&type=chunk)[24](index=24&type=chunk) - On December 21, 2023, the company changed its corporate name from Park City Group, Inc. to ReposiTrak, Inc[22](index=22&type=chunk) Disaggregation of Revenue (Nine Months Ended March 31) | Revenue Type | 2025 | 2024 | | :--- | :--- | :--- | | Recurring revenue – subscription and support | $16,547,879 | $15,250,302 | | Non-recurring revenue – setup and training | $297,903 | $20,427 | | **Total revenue** | **$16,845,782** | **$15,270,729** | - The company is executing a three-year plan to redeem all Series B and B-1 Preferred Stock, which began in August 2023, with **$4.3 million** remaining available for future redemptions as of March 31, 2025[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - The Board has authorized a total of **$21.0 million** for the Share Repurchase Program, with **$7.9 million** remaining available for repurchases as of March 31, 2025[62](index=62&type=chunk)[63](index=63&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue growth to increased demand for its compliance, supply chain, and traceability solutions, driven by regulatory requirements like FSMA 204, maintaining a strong liquidity position with $28.1 million in cash and no bank debt as of March 31, 2025 [Recent Developments](index=22&type=section&id=Recent%20Developments) The company declared a quarterly cash dividend in March 2025, while the FDA's FSMA 204, despite an extended compliance deadline to July 2028, is driving significant demand for the ReposiTrak Traceability Network due to accelerated retailer requirements - On March 21, 2025, the Board declared a quarterly cash dividend of **$0.01815 per share**[77](index=77&type=chunk) - The compliance deadline for FSMA 204 was extended to **July 20, 2028**, but major retailers are accelerating timelines, with some requiring compliance by **June 30, 2025**, for all foods, not just those on the FDA's Food Traceability List (FTL)[81](index=81&type=chunk)[83](index=83&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For the three months ended March 31, 2025, revenue increased 16% year-over-year to $5.9 million, driven by recurring subscription growth, with operating expenses rising modestly, while for the nine-month period, revenue grew 10% to $16.8 million, reflecting operational leverage Comparison of Three Months Ended March 31, 2025 to 2024 | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,913,732 | $5,084,866 | $828,866 | 16% | | Cost of services | $911,693 | $831,912 | $79,781 | 10% | | Sales and marketing | $1,408,861 | $1,349,838 | $59,023 | 4% | | General and administrative | $1,455,602 | $1,352,197 | $103,405 | 8% | Comparison of Nine Months Ended March 31, 2025 to 2024 | Item | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $16,845,782 | $15,270,729 | $1,575,053 | 10% | | Cost of services | $2,773,468 | $2,571,533 | $201,935 | 8% | | Sales and marketing | $4,392,997 | $4,119,716 | $273,281 | 7% | | General and administrative | $4,124,706 | $3,978,798 | $145,908 | 4% | [Financial Position, Liquidity and Capital Resources](index=28&type=section&id=Financial%20Position,%20Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with cash and equivalents increasing by 12% to $28.1 million at March 31, 2025, working capital improving to $27.3 million, and cash from operations growing 38% to $6.8 million, leading to the termination of its revolving credit facility and zero bank debt - Cash and cash equivalents increased by **12%** to **$28,134,321** as of March 31, 2025, from **$25,153,862** at June 30, 2024[103](index=103&type=chunk)[104](index=104&type=chunk) - Net cash provided by operating activities for the nine months ended March 31, 2025, increased **38%** to **$6,763,371**, primarily due to higher deferred revenue and collections from traceability customers[105](index=105&type=chunk) - Working capital increased by **$2.6 million** to **$27,318,199** at March 31, 2025, from **$24,757,025** at June 30, 2024[109](index=109&type=chunk) - On March 15, 2024, the company chose not to renew its **$10.0 million** Revolving Credit Agreement due to its strong financial position and had **zero bank debt** at March 31, 2025[114](index=114&type=chunk)[111](index=111&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is primarily related to interest rate changes affecting its short-term investments, with no foreign currency exchange risk as business is conducted principally in the U.S., and management does not expect material effects on net income from interest rate changes - The company's financial results are not affected by foreign currency exchange rates as business is conducted principally in the United States[131](index=131&type=chunk) - Interest rate risk is related to investments in short-term financial instruments, with cash totaling **$28.1 million** at a weighted average interest rate of **4.84%** as of March 31, 2025[132](index=132&type=chunk)[134](index=134&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of March 31, 2025, concluding they are effective, with no material changes to internal control over financial reporting identified during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[135](index=135&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the quarter[135](index=135&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any pending or threatened material legal proceedings that would have a material adverse effect on its business or financial condition - There are no pending or threatened material legal proceedings against the company[137](index=137&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) There have been no new risk factors identified beyond those disclosed in the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No additional risk factors have been identified since the last Annual Report on Form 10-K[138](index=138&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[139](index=139&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, along with Inline XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents[142](index=142&type=chunk)

Financial Data and Key Metrics Changes - Revenue grew 16% in the third fiscal quarter to $5,900,000 compared to $5,100,000 in the prior year [12] - GAAP net income increased from $1,600,000 to $2,000,000, up 27% [14] - Earnings per share basic and diluted was $0.10 per share, compared to $0.08 last year [15] - Total revenue for the fiscal year to date increased 10.3% to $16,800,000 versus $15,300,000 [16] Business Line Data and Key Metrics Changes - Recurring revenue increased 15% to $5,800,000, although the percentage of recurring to total revenue declined from 99% to 98% due to accelerated customer onboarding [13] - Income from operations increased 43% from $1,300,000 to $1,800,000 [14] - The company is experiencing growth across all lines of business, including traceability, compliance, and supply chain [9] Market Data and Key Metrics Changes - The FDA extended the enforcement deadline for compliance by thirty months, allowing more time for smaller distributors and producers to meet requirements [20] - Leading retailers are prioritizing food safety and investing in food traceability, which is driving market adoption [21] Company Strategy and Development Direction - The company aims to grow annual revenue at a double-digit pace between 10% to 20% and profitability even faster [5] - The strategy includes exceptional customer care, flawless execution, and increasing recurring revenue while balancing costs with opportunities [12] - The company is focused on cross-selling initiatives, leveraging a single technology platform to enhance operational efficiencies [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth and the ability to convert revenue into cash effectively [28] - The company anticipates returning about 50% of annual cash generation to shareholders through dividends and stock repurchases [28] - Management acknowledged the need for ongoing work to balance opportunities with customer service [28] Other Important Information - The company has over $28,000,000 in cash as of March 31, 2025, net of capital returned to shareholders [15] - The company has redeemed $4,600,000 in preferred stock with approximately $4,200,000 remaining [18] Q&A Session Questions and Answers Question: What is the impact of tariffs on the business? - Management indicated that tariffs introduce uncertainty but have not significantly impacted business operations [32][33] Question: How should changes in the cost structure be viewed? - Management stated that while they will continue to invest in awareness and automation, they do not foresee significant changes in the cost structure [34][36] Question: Can you elaborate on the ability to cross-sell products? - Management highlighted that the single platform allows for significant operating leverage and improved cross-selling capabilities, leading to growth across various business lines [47][48] Question: What are the capital allocation plans regarding stock buybacks and M&A? - Management expressed a preference for building applications in-house rather than acquiring technologies, focusing on domain knowledge and customer acquisition [49][51]

[Earnings Release Overview](index=1&type=section&id=Earnings%20Release%20Overview) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) ReposiTrak reported strong Q2 2025 results with $5.5 million revenue and $0.08 EPS, driven by a 70% increase in deferred revenue FQ2 2025 Key Financial Metrics | Metric | FQ2 2025 | FQ2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $5.5 million | $5.1 million | +7% | | Operating Income | $1.4 million | $1.2 million | +9% | | GAAP Net Income | $1.6 million | $1.5 million | +7% | | Net Income to Common Shareholders | $1.5 million | $1.3 million | +12% | | Diluted EPS | $0.08 | $0.07 | +14.3% | | Cash Balance (End of Quarter) | $28.0 million | N/A | - | - Deferred revenue increased by **70%**, reflecting substantial growth in contracted and onboarded customers, suggesting strong incremental revenue recognition over the next twelve months[2](index=2&type=chunk)[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Randall K. Fields highlighted accelerating RTN supplier onboarding due to FSMA 204, expanding market demand, and efficient revenue conversion into profitability and record cash - The pace of supplier onboarding is accelerating ahead of the January 2026 FSMA 204 deadline, driving demand for the ReposiTrak Traceability Network (RTN)[4](index=4&type=chunk) - Retailers are pushing for traceability on all food items, significantly exceeding the scope of FDA mandates, which expands the company's addressable market[4](index=4&type=chunk) - The company is confident in its ability to generate **double-digit top-line growth** for the remainder of the fiscal year and into fiscal 2026, supported by a strong deferred revenue base[4](index=4&type=chunk) - ReposiTrak is effectively converting revenue growth into higher profitability and cash generation, achieving record cash balances[4](index=4&type=chunk) [Financial Performance Analysis](index=1&type=section&id=Financial%20Performance%20Analysis) [Second Fiscal Quarter Financial Results](index=1&type=section&id=Second%20Fiscal%20Quarter%20Financial%20Results) ReposiTrak reported Q2 2025 revenue up 7.1% to $5.5 million and net income up 11.6% to $1.5 million ($0.08 EPS), despite increased sales and marketing FQ2 2025 vs FQ2 2024 Performance (Three Months Ended Dec 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $5,490,908 | $5,125,751 | +7.1% | | Total Operating Expense | $4,138,857 | $3,884,900 | +6.5% | | Income from Operations | $1,352,051 | $1,240,851 | +9.0% | | Net Income | $1,551,080 | $1,451,149 | +6.9% | | Diluted EPS | $0.08 | $0.07 | +14.3% | - Sales and marketing expenses increased by **15.1%** year-over-year, attributed to strategic investments in the Traceability solution[5](index=5&type=chunk) [Year-to-Date Financial Results](index=2&type=section&id=Year-to-Date%20Financial%20Results) Year-to-date revenue increased 7.3% to $10.9 million, with GAAP net income rising 13.7% to $3.2 million and diluted EPS reaching $0.16 YTD 2025 vs YTD 2024 Performance (Six Months Ended Dec 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $10,932,050 | $10,185,863 | +7.3% | | Total Operating Expense | $8,099,938 | $7,745,003 | +4.6% | | GAAP Net Income | $3,216,235 | $2,829,697 | +13.7% | | Diluted EPS | $0.16 | $0.13 | +23.1% | [Capital Management and Financial Position](index=2&type=section&id=Capital%20Management%20and%20Financial%20Position) [Return of Capital](index=2&type=section&id=Return%20of%20Capital) The company continued its capital return program in FQ2 2025, redeeming $750k preferred shares and repurchasing $100k common stock, with $7.9 million remaining for buybacks - In FQ2 2025, the company redeemed **70,093 preferred shares** for a total of **$749,995**[8](index=8&type=chunk) - The company repurchased **4,074 shares of common stock** for a total of **$100,017**[8](index=8&type=chunk) - There is approximately **$7.9 million** remaining under the **$21 million** total common share buyback authorization[8](index=8&type=chunk) [Dividends](index=2&type=section&id=Dividends) The Board declared a quarterly cash dividend of $0.01815 per share, annualizing to $0.0726, payable around February 13, 2025 - A quarterly cash dividend of **$0.01815 per share** was declared[9](index=9&type=chunk) [Balance Sheet and Liquidity](index=2&type=section&id=Balance%20Sheet%20and%20Liquidity) ReposiTrak maintained a strong balance sheet with over $28.0 million in cash as of December 31, 2024, an 11.1% increase, and no bank debt - Cash and cash equivalents increased by **11.1%** to **$28.0 million** at December 31, 2024, from **$25.2 million** at June 30, 2024[10](index=10&type=chunk) - The company has no bank debt[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Total assets grew to $54.7 million as of December 31, 2024, with liabilities rising to $6.8 million due to a 70.4% increase in deferred revenue, and equity at $47.9 million Balance Sheet Summary (Unaudited) | Account | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $28,041,398 | $25,153,862 | | Total Current Assets | $32,394,539 | $29,300,167 | | Total Assets | $54,736,809 | $51,596,732 | | **Liabilities & Equity** | | | | Contract liability – deferred revenue | $4,160,207 | $2,441,234 | | Total Liabilities | $6,802,055 | $4,742,114 | | Total Stockholders' Equity | $47,934,754 | $46,854,618 | | Total Liabilities and Equity | $54,736,809 | $51,596,732 | [Consolidated Condensed Statements of Operations](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) The statement of operations shows quarterly revenue up 7.1% and six-month revenue up 7.3%, with net income at $1.55 million and $3.22 million respectively Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | Revenue | $5,490,908 | $10,932,050 | | Income from Operations | $1,352,051 | $2,832,112 | | Net Income | $1,551,080 | $3,216,235 | | Net Income to Common Shareholders | $1,455,464 | $3,012,737 | | Diluted Income per Share | $0.08 | $0.16 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Net cash from operations more than doubled to $5.3 million for the six months ended December 31, 2024, driven by deferred revenue, resulting in a $2.9 million cash increase Cash Flow Summary (Unaudited, Six Months Ended Dec 31) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,328,630 | $2,451,947 | | Net cash provided by (used in) investing activities | $18,869 | $(16,427) | | Net cash used in financing activities | $(2,459,963) | $(3,173,328) | | **Net increase (decrease) in cash** | **$2,887,536** | **$(737,808)** | | Cash at end of period | $28,041,398 | $23,253,071 | [Additional Information](index=2&type=section&id=Additional%20Information) [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) A conference call and webcast to discuss financial results will be held on February 12, 2025, at 4:15 p.m. ET, with replay information available - Conference Call Date: **Wednesday, February 12, 2025**[12](index=12&type=chunk) - Conference Call Time: **4:15 p.m. ET (1:15 p.m. PT)**[12](index=12&type=chunk) - A replay will be available until **March 12, 2025**[12](index=12&type=chunk) [About ReposiTrak & Forward-Looking Statements](index=3&type=section&id=About%20ReposiTrak%20%26%20Forward-Looking%20Statements) ReposiTrak offers cloud-based solutions for food traceability, compliance, and supply chain management, with the report including a standard forward-looking statement disclaimer - ReposiTrak's business consists of three product families: **food traceability, compliance and risk management, and supply chain solutions**[13](index=13&type=chunk) - The document includes forward-looking statements, and readers are cautioned not to place undue reliance on them as actual results could differ materially[14](index=14&type=chunk)

Financial Data and Key Metrics Changes - For Q2 fiscal 2025, total revenue increased by 7% to $5.5 million compared to $5.1 million in the previous year [19] - Recurring revenue rose by 5% to $5.4 million [19] - GAAP net income increased from $1.5 million to $1.6 million, a 7% rise [22] - Earnings per share increased by 14% from $0.07 to $0.08 [23] - Cash on the balance sheet reached $28 million, a 12% increase from June 30, 2024 [26] Business Line Data and Key Metrics Changes - All business lines, including traceability, compliance, and supply chain, are experiencing growth [10] - Deferred revenue grew by 70% from $2.4 million to $4.2 million since June 2024, indicating strong future revenue recognition [12] - Contribution margin is currently at 64%, with a goal to reach 80% [15] Market Data and Key Metrics Changes - The grocery industry is increasingly adopting end-to-end traceability, driven by both FDA mandates and competitive market forces [28] - Major retailers like Kroger, Albertsons, Walmart, and Target are implementing traceability ahead of FDA deadlines [29][37] Company Strategy and Development Direction - The company aims to grow recurring revenue, increase profitability, and return capital to shareholders through dividends and stock buybacks [9] - Focus on providing superior solutions to customers while maintaining a simple operational philosophy [18] - Anticipates double-digit revenue growth in the second half of the fiscal year, targeting a full-year growth of 10% to 20% [33] Management's Comments on Operating Environment and Future Outlook - Management is confident about the future, expecting a smooth onboarding process for customers due to potential delays in FDA enforcement [31][43] - The company is positioned as a leading solution provider for traceability, with a growing base of recurring and deferred revenue [32] - Management believes that the focus on food safety will benefit the company, as it aligns with their core business [79] Other Important Information - The company has no bank debt and has redeemed $1.5 million in preferred shares while increasing dividends [26][81] - The company’s five-year CAGR for net income is 30% and for earnings per share is 43% [51] Q&A Session Summary Question: Update on customer onboarding speed - Management noted significant progress with the onboarding process through their automation platform, the Wizard, expecting a higher percentage of users to onboard without assistance in the future [55] Question: Fixed vs. variable costs - Fixed costs are approximately $12 million, with minimal incremental costs associated with additional revenue [59][60] Question: Contribution margin of business lines - All three business lines (supply chain, compliance, traceability) generate similar contribution margins, with no rapid rise in expenses expected as revenue increases [62][63] Question: Managing current egg shortages - Management indicated that the egg shortage is driven by uncontrollable factors like bird flu, and there is little they can do to assist retailers in this situation [71][72] Question: Implications of potential tariffs - The company can help retailers navigate tariffs by improving supply chain forecasting and ordering processes [75] Question: Thoughts on RFK Junior's focus on food safety - Management believes that increased attention to food safety will be beneficial for the company, as it aligns with their core mission [79] Question: Capital allocation strategy - The company continues to focus on a balanced capital allocation strategy, including dividends, stock buybacks, and maintaining cash reserves [82] Question: AI-related implications for the company - Management stated that AI has been part of their operations for years and will continue to be integrated without significantly impacting capital expenditures [85] Question: Working with restaurants - Management is close to onboarding food distributors for the restaurant sector but remains less optimistic about this segment compared to grocery [88]

```markdown [PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) ReposiTrak, Inc.'s unaudited condensed consolidated financial statements as of December 31, 2024, show total assets at **$54.7 million** and equity at **$47.9 million**, with six-month revenue up **7%** to **$10.9 million**, net income at **$3.2 million**, and operating cash flow significantly increasing to **$5.3 million** [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) As of December 31, 2024, the company's total assets increased to **$54.7 million**, driven by a rise in cash to **$28.0 million**, while total liabilities grew to **$6.8 million** and stockholders' equity reached **$47.9 million** Consolidated Condensed Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Dec 31, 2024 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | $28,041,398 | $25,153,862 | | Total Current Assets | $32,394,539 | $29,300,167 | | Goodwill | $20,883,886 | $20,883,886 | | **Total Assets** | **$54,736,809** | **$51,596,732** | | **Liabilities & Equity** | | | | Contract liability – deferred revenue | $4,160,207 | $2,441,234 | | Total current liabilities | $6,252,935 | $4,543,142 | | **Total liabilities** | **$6,802,055** | **$4,742,114** | | **Total stockholders' equity** | **$47,934,754** | **$46,854,618** | [Consolidated Condensed Statements of Operations and Comprehensive Income](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the six months ended December 31, 2024, revenue grew **7%** to **$10.9 million** and net income increased to **$3.2 million**, with diluted EPS reaching **$0.16**, reflecting strong performance across both three and six-month periods Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | Six Months Ended Dec 31, 2024 ($) | Six Months Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $5,490,908 | $5,125,751 | $10,932,050 | $10,185,863 | | Income from operations | $1,352,051 | $1,240,851 | $2,832,112 | $2,440,860 | | Net income | $1,551,080 | $1,451,149 | $3,216,235 | $2,829,697 | | Diluted income per share | $0.08 | $0.07 | $0.16 | $0.13 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) For the six months ended December 31, 2024, net cash from operating activities surged **117%** to **$5.3 million** due to increased deferred revenue, while net cash used in financing activities decreased to **$2.5 million** reflecting lower buybacks and preferred stock redemption Cash Flow Highlights for Six Months Ended Dec 31 (Unaudited) | Cash Flow Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,328,630 | $2,451,947 | | Net cash provided by (used in) investing activities | $18,869 | $(16,427) | | Net cash used in financing activities | $(2,459,963) | $(3,173,328) | | **Net increase (decrease) in cash** | **$2,887,536** | **$(737,808)** | | **Cash at end of period** | **$28,041,398** | **$23,253,071** | [Notes to Consolidated Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) The notes detail the company's SaaS business model, key accounting policies including revenue recognition, and equity programs such as a share repurchase program with **$7.9 million** remaining and an ongoing preferred stock redemption plan, with recurring subscription services comprising over **98%** of revenue - The company operates a Software-as-a-Service (SaaS) platform with three main application suites: Compliance Management, Traceability Network (RTN), and Supply Chain Solutions, primarily serving food retailers, wholesalers, and their suppliers[19](index=19&type=chunk)[24](index=24&type=chunk) - On December 21, 2023, the company changed its corporate name from Park City Group, Inc. to ReposiTrak, Inc[23](index=23&type=chunk) Disaggregation of Revenue (Six Months Ended Dec 31) | Revenue Type | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Recurring revenue – subscription and support | $10,733,947 | $10,171,436 | | Non-recurring revenue – setup and training | $198,103 | $14,427 | | **Total Revenue** | **$10,932,050** | **$10,185,863** | - The company is executing a plan to redeem all Series B and B-1 Preferred Stock over a three-year period As of December 31, 2024, **$5.1 million** remains available for future redemptions[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The Share Repurchase Program has a total authorization of **$21.0 million**, with **$7.9 million** remaining available for repurchases as of December 31, 2024[64](index=64&type=chunk)[65](index=65&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **7%** year-over-year revenue growth for the periods ended December 31, 2024, to increased demand driven by FSMA 204, with operating expenses rising due to growth investments, while the company's financial position strengthened with cash at **$28.0 million** and working capital at **$26.1 million**, leading to the termination of its credit facility [Recent Developments](index=21&type=section&id=Recent%20Developments) The company increased its quarterly cash dividend by **10%** to **$0.01815** per share, while management highlights the significant business opportunity presented by the FDA's FSMA 204 rule, a core driver for its ReposiTrak Traceability Network - The Board of Directors approved a **10%** increase to the quarterly cash dividend, raising it to **$0.01815** per share[79](index=79&type=chunk) - The FDA's Food Safety Modernization Act Section 204(d) (FSMA 204), with a compliance deadline of January 20, 2026, is a major catalyst for the company's traceability solutions, as it requires extensive data management for high-risk foods across the supply chain[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) For the six months ended December 31, 2024, revenue grew **7%** to **$10.9 million** driven by recurring subscriptions, while cost of services increased **7%**, sales and marketing **8%**, and general and administrative **2%**, leading to a **16%** rise in income from operations to **$2.8 million** Comparison of Six Months Ended December 31, 2024 and 2023 | Line Item | 2024 ($) | 2023 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $10,932,050 | $10,185,863 | +7% | | Cost of services | $1,861,775 | $1,739,621 | +7% | | Sales and marketing | $2,984,136 | $2,769,878 | +8% | | General and administrative | $2,669,104 | $2,626,601 | +2% | | Income from operations | $2,832,112 | $2,440,860 | +16% | - Revenue growth is attributed to rising demand for compliance, supply chain, and traceability services, spurred by industry response to food safety hazards and regulatory mandates like FSMA 204[94](index=94&type=chunk) - Preferred dividends decreased by **31%** to **$203,498** for the six-month period due to the ongoing redemption and retirement of Preferred Stock[102](index=102&type=chunk) [Financial Position, Liquidity and Capital Resources](index=28&type=section&id=Financial%20Position,%20Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved, with cash increasing **11%** to **$28.0 million** and working capital growing to **$26.1 million**, driven by a **117%** surge in operating cash flow to **$5.3 million** from increased deferred revenue, leading to the termination of its **$10.0 million** revolving credit facility Key Liquidity Metrics | Metric | Dec 31, 2024 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $28,041,398 | $25,153,862 | | Working Capital | $26,141,604 | $24,757,025 | | Current Ratio | 5.18 | 6.45 | - Net cash provided by operating activities increased **117%** to **$5.3 million** for the six months ended Dec 31, 2024, mainly due to an increase in deferred revenue from customers paying annual subscriptions in advance[107](index=107&type=chunk) - The company terminated its Revolving Credit Agreement in March 2024, citing its strong financial position There were no amounts due at the time[116](index=116&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces minimal market risk, with no foreign currency exchange risk due to its US-centric operations, and interest rate risk from short-term investments is not expected to materially affect its financial position - The company's business is conducted principally in the United States, so it is not affected by foreign currency exchange rates[133](index=133&type=chunk) - Exposure to interest rate risk is primarily from investments in short-term financial instruments As of December 31, 2024, the company held **$28.0 million** in cash with a weighted average interest rate of **5.27%**[134](index=134&type=chunk)[136](index=136&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) As of December 31, 2024, the CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and found them to be effective as of December 31, 2024[138](index=138&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the period[138](index=138&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any pending or threatened material legal proceedings that would significantly adversely affect its business or financial condition - There are currently no pending or threatened material legal proceedings against the company[140](index=140&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No new risk factors have been identified beyond those disclosed in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 - No additional risk factors have been identified since the company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024[141](index=141&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[142](index=142&type=chunk) [Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[143](index=143&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information) The company reported no other information required to be disclosed under this item - None[144](index=144&type=chunk) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) The report includes required certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002, as well as Inline XBRL financial data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and Inline XBRL documents[146](index=146&type=chunk) [Signatures](index=35&type=section&id=Signatures) - The report was signed on February 12, 2025, by Randall K. Fields, Chair of the Board and Chief Executive Officer, and John R. Merrill, Chief Financial Officer[149](index=149&type=chunk)[150](index=150&type=chunk) ```

Financial Data and Key Metrics Changes - For Q1 fiscal 2025, total revenue increased by 8% to $5.4 million compared to $5.1 million in the previous year [15] - Recurring revenue rose by 6% from $5 million to just under $5.4 million, representing 98% of total revenue [15][16] - Operating expenses increased by 3% to $4 million, while income from operations grew by 23% to $1.5 million [17] - GAAP net income increased by 21% to $1.7 million, with net income to common shareholders rising by 26% to $1.6 million [17][18] - Basic earnings per share improved to $0.09 from $0.07 in the previous year [18] Business Line Data and Key Metrics Changes - Traceability contributed 6% of recurring revenue, with expectations for this contribution to increase throughout fiscal 2025 [21][48] - The company is onboarding 4,000 suppliers, which could represent approximately $10 million in additional annual recurring revenue over the next 24 months [47] Market Data and Key Metrics Changes - Major retailers like Wal-Mart, Target, and Kroger are setting industry standards for traceability, impacting suppliers significantly [27][32] - The market for traceability is expanding rapidly, driven by consumer confidence in food safety and regulatory pressures [26][36] Company Strategy and Development Direction - The company aims to double its annual recurring revenue run rate over the next several years while maintaining 80% gross margins [14] - The focus remains on delivering superior solutions at the lowest price with perfect execution, increasing recurring revenue, and rationalizing revenue expansion with costs [12][23] - The company is committed to a capital allocation strategy that includes redeeming preferred shares and increasing dividends [19][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that traceability will significantly grow the company, potentially doubling its size in the next three years [26] - The urgency for suppliers to comply with traceability requirements is emphasized, as it is becoming a market mandate rather than just a regulatory issue [32][70] - The company is focused on improving automation tools to enhance efficiency and onboarding processes [39][40] Other Important Information - The company has a strong cash position of $25.8 million, net of over $20 million returned to shareholders [12] - The company has paid off all bank debt and does not plan to renew its $10 million line of credit [19] Q&A Session Summary Question: Are Wal-Mart, Target, and Kroger setting the industry standard? - Management believes these retailers have established competitive standards that smaller companies can follow if they utilize the company's services [55][56] Question: What could the percentage of sales from traceability be in the coming year? - Management anticipates that traceability could account for 50% of revenue within the next two to three years [58] Question: Thoughts on adjacent markets like restaurants and healthcare? - While there are opportunities in non-retail food spaces, the company sees these markets as smaller compared to retail food [60][61] Question: How is the growth composition of the 94% of revenue that wasn't traceability? - Management indicated that compliance and supply chain revenues are performing well, approximately 50/50 [71] Question: What are the conditions for capital allocation regarding preferred and common stock? - The strategy remains to redeem preferred shares while also considering increasing dividends and buying back common stock [72][73] Question: Update on efforts to ensure high-margin customers? - Management emphasized the importance of maintaining successful relationships with customers and may prune less favorable ones if necessary [79][81] Question: Update on AI efforts? - The company focuses on process improvement and automation rather than simply adding personnel, aiming for high levels of customer satisfaction [82][86] Question: Current thoughts on strategic M&A? - Management does not see acquisitions as necessary at this point, preferring to focus on internal scaling and automation [89]

Revenue and Growth - Revenue for the three months ended September 30, 2024, was $5,441,142, an 8% increase from $5,060,112 in the same period of 2023, driven by growth in recurring subscription revenue, particularly in traceability services[74]. Expenses - Cost of services and product support increased by 12% to $859,219 for the three months ended September 30, 2024, primarily due to investments in automation and information security services[76]. - Sales and marketing expenses rose by 2% to $1,529,100, accounting for 28% of total revenue, with increased commissions and marketing efforts related to FSMA 204 traceability awareness[77]. - General and administrative expenses increased by 1% to $1,292,551, representing 24% of total revenue, mainly due to higher employee benefit costs and insurance[78]. - Depreciation and amortization expense decreased by 9% to $280,211, reflecting the full depreciation of certain assets[80]. Income and Dividends - Net other income increased by 20% to $335,094, attributed to higher cash balances and increased interest income from fixed income instruments[81]. - The company declared a quarterly cash dividend of $0.0165 per share, representing an annual yield of approximately 0.34% based on closing prices on September 30, 2024[68]. - A 10% increase in the quarterly dividend was approved, effective for the dividend payable to shareholders of record on December 31, 2024[69]. - Preferred dividends decreased to $107,882 for the three months ended September 30, 2024, down 26% from $146,611 in the same period of 2023[82]. Cash Flow and Working Capital - Cash and cash equivalents increased by 3% to $25,790,206 as of September 30, 2024, compared to $25,153,862 as of June 30, 2024, primarily due to higher revenue[85]. - Net cash provided by operating activities rose 23% to $1,868,900 for the three months ended September 30, 2024, compared to $1,520,770 for the same period in 2023[87]. - Net cash provided by investing activities was $34,086 for the three months ended September 30, 2024, compared to $0 for the same period in 2023, due to the sale of marketable securities[88]. - Net cash used in financing activities decreased by 30% to $1,266,642 for the three months ended September 30, 2024, compared to $1,814,421 in the same period of 2023[90]. - Positive working capital increased by $877,518 to $25,634,543 as of September 30, 2024, compared to $24,757,025 at June 30, 2024[92]. Assets and Liabilities - Current assets totaled $30,091,919 as of September 30, 2024, reflecting a 3% increase from $29,300,167 as of June 30, 2024[93]. - Current liabilities decreased by 2% to $4,457,376 as of September 30, 2024, from $4,543,142 as of June 30, 2024[94]. - The Company had zero bank debt as of September 30, 2024, following the termination of its credit facility in March 2024[96]. Preferred Stock and Accounting - The Company plans to redeem all Series B and B1 Preferred stock over three years, starting from August 2023[82]. - The company adopted new accounting standards with no material changes to revenue recognition practices compared to previous periods[111]. Lease Obligations and Investments - The effective annual percentage rate (APR) for capital leases is fixed at 4.55%[118]. - As of September 30, 2024, the total cost of lease obligations is less than $400,000[118]. - The aggregate fair value of cash investments is $25,790,206 with a weighted average interest rate of 4.84%[119]. - The company does not engage in hedging transactions to mitigate foreign currency exchange rate risks, as its operations are primarily in the United States[116]. - The company assesses available-for-sale debt securities for credit loss, considering factors such as fair value and rating agency changes[115]. - The company’s exposure to interest rate changes is primarily related to short-term financial instruments, but it does not expect material changes in net income due to interest rate fluctuations[117]. - The company’s investments include U.S. government and corporate debt, classified as available-for-sale debt investments[114]. - The company uses a specific identification method to determine the cost basis of available-for-sale debt investments sold[114]. - The company’s financial results are not significantly affected by foreign market conditions due to its domestic focus[116].

[Fiscal Third Quarter 2024 Earnings Release](index=1&type=section&id=Fiscal%20Third%20Quarter%202024%20Earnings%20Release) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) The company reported steady revenue growth driven by its traceability business and maintained a strong, debt-free balance sheet - The company is experiencing accelerated onboarding of traceability customers, with this segment now accounting for approximately **5% of annualized consolidated revenue**[3](index=3&type=chunk) - Management is confident that the Traceability business will **double the company's total revenue over the next three years**, based on facilities already implemented and in the queue[3](index=3&type=chunk) - The company maintains robust profitability and a strong balance sheet, ending the quarter with **$24.5 million in cash and no debt**[1](index=1&type=chunk)[3](index=3&type=chunk)[5](index=5&type=chunk) Q3 2024 Key Performance Indicators | Indicator | Value | Change (YoY) | | :--- | :--- | :--- | | Total Revenue | $5.1 million | +5% | | Recurring Revenue | $5.1 million | +6% | | Diluted EPS | $0.08 | Unchanged | [Financial Results](index=1&type=section&id=Financial%20Results) Quarterly and year-to-date revenue grew steadily, though net income comparisons were skewed by a prior-year non-recurring credit [Third Fiscal Quarter Financial Results](index=1&type=section&id=Third%20Fiscal%20Quarter%20Financial%20Results) Q3 2024 vs. Q3 2023 Financials (Three Months Ended March 31) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $5.08M | $4.82M | +5% | | Operating Expense | $3.82M | $3.30M | +15% | | Operating Income | $1.26M | $1.52M | -17% | | GAAP Net Income | $1.55M | $1.66M | -7% | | Diluted EPS | $0.08 | $0.08 | 0% | - The **15% increase in operating expenses** and subsequent decrease in operating income were primarily due to a non-recurring **$1 million Employee Retention Credit (ERC)** received in Q3 2023[5](index=5&type=chunk) - **Recurring revenue grew 6% to $5.1 million**, representing approximately 99% of total revenue for the quarter[5](index=5&type=chunk) [Year-to-Date Financial Results](index=2&type=section&id=Year-to-Date%20Financial%20Results) YTD 2024 vs. YTD 2023 Financials (Nine Months Ended March 31) | Metric | YTD 2024 | YTD 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $15.27M | $14.30M | +7% | | Operating Expense | $11.57M | $10.37M | +12% | | GAAP Net Income | $4.38M | $4.21M | +4% | | Diluted EPS | $0.21 | $0.20 | +5% | - Similar to the quarterly results, the year-to-date operating expense comparison is affected by the **non-recurring $1 million Employee Retention Credit** from the prior-year period[6](index=6&type=chunk) [Capital Management and Balance Sheet](index=2&type=section&id=Capital%20Management%20and%20Balance%20Sheet) The company maintains a strong, debt-free balance sheet while actively returning capital via dividends and share buybacks - In Q3 2024, the company redeemed 70,093 preferred shares for a total of $749,995 and anticipates redeeming all remaining preferred shares **($7.46 million) over the next three years**[7](index=7&type=chunk) - The company has approximately **$8 million remaining** under its total $21 million common share buyback authorization[7](index=7&type=chunk) - The Board of Directors approved a **10% increase in the quarterly cash dividend** to 1.65 cents per share (6.6 cents annually), effective December 2023[8](index=8&type=chunk) - As of March 31, 2024, the company had **$24.5 million in cash and cash equivalents** and no outstanding debt on its working line of credit[9](index=9&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Unaudited statements detail the company's financial position, operational performance, and cash flows for the period [Consolidated Condensed Balance Sheets](index=4&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Balance Sheet Summary (Unaudited) | Account | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $24,452,680 | $23,990,879 | | Total Current Assets | $28,827,713 | $27,274,620 | | Total Assets | $51,333,478 | $50,583,431 | | Total Liabilities | $4,860,581 | $4,701,500 | | Total Stockholders' Equity | $46,472,897 | $45,881,931 | [Consolidated Condensed Statements of Operations](index=5&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations) Statement of Operations - Three Months Ended March 31 (Unaudited) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $5,084,866 | $4,824,101 | | Income from operations | $1,262,343 | $1,521,782 | | Net income | $1,550,427 | $1,663,020 | | Diluted income per share | $0.08 | $0.08 | Statement of Operations - Nine Months Ended March 31 (Unaudited) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $15,270,729 | $14,295,091 | | Income from operations | $3,703,203 | $3,925,370 | | Net income | $4,380,124 | $4,213,476 | | Diluted income per share | $0.21 | $0.20 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows) Cash Flow Summary - Nine Months Ended March 31 (Unaudited) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,910,741 | $7,065,890 | | Net cash (used in) investing activities | ($48,538) | ($903,187) | | Net cash used in financing activities | ($4,400,402) | ($4,682,158) | | Net increase in cash | $461,801 | $1,480,545 | | Cash at end of period | $24,452,680 | $22,941,493 |