Financial Data and Key Metrics Changes - For the second fiscal quarter of 2026, revenue increased by 7% from $5.5 million to $5.9 million [8] - Year-to-date total revenue increased by 8% from $10.9 million to $11.8 million [11] - GAAP net income for the second fiscal quarter was $1.7 million, up 9% from $1.6 million last year [9] - Earnings per share for the quarter was $0.09, reflecting a 13% year-over-year growth [10] - Total cash increased to $28.7 million from $28.6 million at the end of the previous quarter, with zero bank debt [10] Business Line Data and Key Metrics Changes - The company has converted over $7 million in one-time revenue to recurring SaaS, increasing recurring revenue from 62% to over 98% of total revenue [4] - Income from operations increased by 34% to $1.8 million compared to $1.4 million [9] - The company has experienced growth across all lines of business, with cross-selling initiatives delivering continued momentum [12] Market Data and Key Metrics Changes - Traceability revenue is estimated to be between 8% and 10% of total revenue, indicating growth in this segment [32] - The company is positioned to benefit from increasing consumer awareness regarding food safety, driven by trends like MAHA and organic food movements [38] Company Strategy and Development Direction - The long-term strategy focuses on converting revenue streams to SaaS, paying down debt, and increasing contribution margins [4] - The company is investing in product development, including new solutions for tracking accuracy and operational cost reduction [6] - The filing of two patents for Touchless Traceability aims to create a competitive moat around the business [7][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges of achieving consistent accuracy in supplier data, with error rates between 50% and 70% [18] - The company anticipates increased demand for traceability solutions as the FDA deadline approaches, which is expected to accelerate onboarding and interest in their offerings [26][49] - Management remains confident in the company's ability to provide unique solutions that address data quality issues in traceability [22] Other Important Information - The company has repurchased approximately 80,000 common shares for $1.1 million during the second quarter [13] - A quarterly dividend of $0.02 per share was declared, marking the third 10% increase since the dividend was established [16] Q&A Session Summary Question: What is the current percentage of revenue from traceability? - Management indicated that traceability revenue is between 8% and 10% of total revenue [32] Question: Can AI improve the accuracy of traceability data? - Management confirmed that their AI tools can detect and correct errors in traceability data, enhancing accuracy [34][35] Question: What is the impact of MAHA on the business? - Management noted that increased consumer awareness of food safety due to MAHA positively impacts their business [38] Question: Can the company provide traceability on a by-ingredient basis? - Management confirmed that their system can track products and ingredients, allowing for detailed traceability [40] Question: Does food inflation impact the business? - Management acknowledged that food inflation indirectly affects their business, particularly if supermarkets face margin squeezes [42] Question: How is investment spending reflected in the results? - Management explained that investment spending is more targeted, with less in marketing and more in development, affecting overall expenses [44][45] Question: What are the current thoughts on strategic M&A? - Management stated that while they are open to opportunities, their current focus is on existing projects and preparing for upcoming demand in traceability [47][50]

Financial Data and Key Metrics Changes - The company converted over $7 million in one-time revenue to recurring SaaS, increasing recurring revenue from 62% to over 98% of total revenue since 2020 [4] - Net margin grew from 8% to over 30% during the same period [5] - GAAP net income for Q2 2026 was $1.7 million, up 9% from $1.6 million last year [9] - Fiscal 2026 year-to-date total revenue increased 8% from $10.9 million to $11.8 million [11] - Total cash increased to $28.7 million from $28.6 million at June 30, with zero bank debt [10] Business Line Data and Key Metrics Changes - The company is experiencing growth in all lines of business, with cross-selling initiatives delivering continued momentum [12] - Traditional sales are growing, and the focus on customer care and flawless execution remains paramount [12] Market Data and Key Metrics Changes - The ReposiTrak Traceability Network (RTN) is the industry leader, with a growing queue to join the network [16] - The company is addressing the challenge of data accuracy in traceability, with error rates from suppliers ranging between 50% and 70% [17] Company Strategy and Development Direction - The company aims to drive cash and return capital to shareholders while investing in product development and innovation [5][6] - Recent investments include filing for two patents related to Touchless Traceability, enhancing the company's competitive moat [6][23] - The focus on cross-selling and expanding the RTN is expected to generate significant traction [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges of data accuracy in traceability and the need for complex process changes across the supply chain [17] - The looming FDA deadline for traceability is expected to accelerate interest in the company's solutions [25][47] - The company is preparing for increased demand for traceability solutions as the deadline approaches [48] Other Important Information - The company has repurchased approximately 80,000 common shares for $1.1 million during Q2 2026 [13] - The board declared a quarterly dividend of $0.02 per share, marking the third 10% increase since the dividend was established [15] Q&A Session Summary Question: What is the current revenue contribution from traceability? - Management indicated that traceability contributes between 8% and 10% of total revenue [31] Question: Can AI improve the accuracy of traceability data? - AI is utilized to detect and correct errors in traceability data, enhancing accuracy significantly [32][34] Question: What impact does MAHA have on the business? - MAHA increases public awareness of food safety, which indirectly benefits the company [37] Question: Can the company provide updates on traceability by ingredients? - The company is capable of tracking products and ingredients, allowing for detailed specifications [39] Question: Does food inflation impact the business? - Food inflation indirectly affects the business as supermarkets face margin squeezes [41] Question: How is investment spending reflected in the results? - Investment spending is more targeted, with less in marketing and more in development [42][43] Question: What are the current thoughts on strategic M&A? - The company is focused on existing initiatives and is not actively pursuing M&A at this time [45][48]

Financial Data and Key Metrics Changes - First fiscal quarter revenue increased by 10% from $5.4 million to $6 million [4] - Income from operations rose by 28% to $1.9 million compared to $1.5 million [5] - GAAP net income increased by 13% to $1.8 million from $1.6 million [6][7] - Earnings per share for the quarter was $0.10 basic and $0.09 diluted, reflecting a year-over-year EPS growth of 13% [8] - Cash from operations decreased to $1.5 million from $1.9 million in the year-ago quarter [8] - Total cash increased to $28.8 million from $28.6 million, maintaining zero bank debt [8] Business Line Data and Key Metrics Changes - All lines of business are experiencing growth, with traditional sales and cross-selling initiatives contributing to accelerated momentum [9] - Revenue per employee is $356,000 annually, significantly higher than the industry average of $175,000 [5] Market Data and Key Metrics Changes - The company is positioned as a dominant player in the traceability and food safety sectors, leveraging its capabilities to grow across all business lines [15][22] - The traceability revenue continues to grow, enhancing the company's reputation in the industry [22] Company Strategy and Development Direction - The company aims to grow annual recurring revenue between 10%-20% and increase profitability at a faster rate [4] - A multi-year initiative to modernize the software code is underway, focusing on automation and AI to enhance operational efficiency [12][20] - The capital allocation strategy includes returning 50% of annual free cash flow to shareholders while maintaining a strong cash reserve [9][10] Management's Comments on Operating Environment and Future Outlook - The management acknowledges a cautious industry environment due to factors like government shutdowns and inflation, but the impact is not substantial [28] - The focus on data integrity and error correction in traceability is seen as a significant opportunity for future growth [30] Other Important Information - The company has redeemed approximately 572,000 shares of preferred stock and continues to repurchase common shares without incurring debt [10][11] - The modernization project is expected to drive significant efficiencies and create incremental value for customers and shareholders [22] Q&A Session Summary Question: How, if at all, were you impacted by the government shutdown? - The shutdown impacts the food industry due to the FDA not working, causing caution in the industry, but the impact is not substantial [28] Question: Do you still believe your by-ingredient efforts are increasing your total addressable market? - Yes, it expands the market as traceability records require participation from suppliers, creating a connected chain [29][32]