ReposiTrak(US:TRAK)2025-02-12 22:15markdown [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)