ReposiTrak Inc
For the period ended Mar 31, 2024. Filed May 15, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 15, 2024
TRAK$6.76-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0001437749-24-004196
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001437749-24-017141
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 109 current paragraphs.
76 unchanged; 25 reworded; 8 added; 3 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 23 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Transfer of listing from NASDAQ to NYSE
Current report
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.
Current report
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.
Current report
General and administrative expense was $1,352,197 and $916,237 for the three months ended March 31, 2024 and 2023, respectively, a 48% increase. The increase in general and administrative expense was primarily due to refund of payroll taxes associated with the ERC that occurred in the prior fiscal year. The ERC was a refund of certain payroll taxes for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts. During the prior fiscal year, the Company received approximately $1.175 million in payroll tax refunds, net of fees. The ERC credit was partially offset by increases in bad debt expense and increases in cost of benefits for employees.
Current report
Depreciation and amortization expense was $288,576 and $305,864 for the three months ended March 31, 2024 and 2023, respectively, a decrease of 6%. The decrease was due to certain assets becoming fully depreciated over their useful lives.
Current report
General and administrative expense was $3,978,798 and $3,392,056 for the nine months ended March 31, 2024 and 2023, respectively, a 17% increase. The increase in general and administrative expense was primarily due to refund of payroll taxes associated with the Employee Retention Credit (“ERC”) that occurred in the prior fiscal year. The ERC was a refund of certain payroll taxes for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts. During the prior fiscal year, the Company received approximately $1.175 million in payroll tax refunds, net of fees. The ERC credit was partially offset by increases in bad debt expense and increases in cost of benefits for employees.
Current report
Cash was $24,452,680 and $23,990,879 at March 31, 2024 and June 30, 2023, respectively. This 2% increase is primarily the result of higher revenue and the corresponding cash receipts from customers.
Current report
On March 15, 2024, given its strong financial position, the Company chose not to renew the Revolving Credit Agreement. There were no amounts due at the time of renewal.
Removed paragraphs (3)
Previous report
General and administrative expense was $1,347,278 and $1,252,357 for the three months ended December 31, 2023 and 2022, respectively, an 8% increase. The increase in general and administrative expense was primarily due to increased salary expense and a rise in general operating costs caused by increased inflation and overall current market conditions. Those costs include but not limited to liability insurance, employee benefits, and other regulatory SOC compliance requirements.
Previous report
General and administrative expense was $2,626,601 and $2,475,819 for the six months ended December 31, 2023 and 2022, respectively, a 6% increase. The increase in general and administrative expense was primarily due to increased salary expense and a rise in general operating costs caused by increased inflation and overall current market conditions.
Previous report
Cash was $23,253,071 and $23,990,879 at December 31, 2023 and June 30, 2023, respectively. This 3% decrease is primarily the result of the purchase of Common Stock under our Share Repurchase Program, the payment of dividends on both the Preferred Stock and Common Stock, and the redemption and retirement of shares of the Preferred Stock during the period.
Reworded paragraphs (25)
Previous wording
On December 12, 2023, 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 December 29, 2023, which were paid to shareholders of record on or about February 1, 2024. Based on the closing prices on December 31, 2023, this represented an annual dividend yield of approximately 0.65%. Subsequent quarterly dividends will be paid within 45 days of each record date of March 31, 2024, June 30, 2024, and September 30, 2024.
Current wording
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
Previous wording
As of December 31, 2023, a total of zero shares of Series B Preferred and 70,093 shares of Series B-1 Preferred were redeemed and retired, for aggregate consideration of $0 and $749,995 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 142,309 shares of Series B-1 Preferred issued and outstanding at December 31, 2023.
Current wording
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.
Previous wording
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 six months ended December 31, 2023, 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.
Current wording
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.
Previous wording
Revenue was $5,125,751 and $4,750,513 for the three months ended December 31, 2023 and 2022, respectively, a 8% increase year-over-year. The increase in revenue was due to revenue growth in subscription, services and other recurring revenue. This is the result of growing industry and consumer concern of 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 risk concerns and disclosure requirements, the Company has seen a corresponding rising demand for its services.
Current wording
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.
Previous wording
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 require buying a particular service outright (i.e., a license). We will continue to make our best effort to reduce this non-recurring transactional revenue when we are able.
Current wording
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.
Previous wording
Sales and marketing expense was $1,264,377 and $1,226,812 for the three months ended December 31, 2023 and 2022, respectively, a 3% increase. The increase in sales and marketing expense was primarily the result of an increase in trade show expense, investment in FSMA 204 traceability marketing, and higher sales travel expense. As the pandemic continues to abate, customers and prospects are returning to the “new normal” requiring in person meetings. The largest contributor to the increase in sales and marketing expense has been an increase in travel cost and trade shows. We believe this trend will continue as many of our trading partners and industry associations will continue to require our assistance in addressing their compliance and supply chain needs particularly in the case of the 2026 traceability deadline.
Current wording
Sales and marketing expense was $1,349,838 and $1,239,946 for the three months ended March 31, 2024 and 2023, respectively, a 9% increase. The increase in sales and marketing expense was primarily the result of an increase in trade show expense, investment in FSMA 204 traceability marketing, and higher sales travel expense. As the pandemic continues to abate, customers and prospects are returning to in person meetings. The largest contributor to the increase in sales and marketing expense has been an increase in travel cost and trade shows. We believe this trend will continue as many of our trading partners and industry associations will continue to require our assistance in addressing their compliance and supply chain needs particularly in the case of the 2026 traceability deadline.
Previous wording
Net other income was $324,325 for the three months ended December 31, 2023, compared to net other income of $149,802 for the three months ended December 31, 2022. Other income increased due to an increase in interest income attributable to elevated interest rates on fixed income instruments on excess cash.
Current wording
Net other income was $348,084 for the three months ended March 31, 2024, compared to net other income of $301,238 for the three months ended March 31, 2023. Other income increased due to an increase in interest income attributable to higher interest rates on fixed income instruments on our excess cash.
Previous wording
Preferred dividends accrued on the Company’s Preferred Stock was $146,611 for the three months ended December 31, 2023 and for the three months ended December 31, 2022. Dividends remained flat in the comparable periods.
Current wording
Preferred dividends accrued on the Company’s Preferred Stock was $134,345 for the three months ended March 31, 2024 and $146,611 for the three months ended March 31, 2023. Dividends decreased due to the redemption of Preferred Stock during the period. Although no assurances can be given, the Company anticipates redeeming the remaining outstanding Preferred Stock over the next 2.5 years.
Previous wording
Comparison of the Six Months Ended December 31, 2023 to the Six Months Ended December 31, 2022.
Current wording
Comparison of the Nine months Ended March 31, 2024 to the Nine months Ended March 31, 2023.
Previous wording
Revenue was $10,185,863 and $9,470,990 for the six months ended December 31, 2023 and 2022, respectively, an 8% increase year-over-year. The increase in revenue was due to revenue growth in subscription, services and other recurring revenue. This is the result of growing industry and consumer concern of 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 risk concerns and disclosure requirements, the Company has seen a corresponding rising demand for its services particularly in the case of traceability requirements in accordance with FSMA 204.
Current wording
Revenue was $15,270,729 and $14,295,091 for the nine months ended March 31, 2024 and 2023, respectively, a 7% 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.
Previous wording
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 require buying a particular service outright (i.e., a license). We will continue to make our best effort to reduce this non-recurring transactional revenue when we are able.
Current wording
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.
Previous wording
Cost of services and product support was $1,739,621 and $1,699,346 for the six months ended December 31, 2023 and 2022, respectively, a 2% increase. This $40,275 increase is primarily the result of increased developer headcount and support services in effort to support the acceleration and expansion of the FSMA 204 initiative. Given the demand in traceability the Company has expended additional resources on further upgrading its security and confidentiality to increase protection of customer data.
Current wording
Cost of services and product support was $2,571,533 and $2,539,618 for the nine months ended March 31, 2024 and 2023, respectively, a 1% increase. This $31,915 increase is primarily the result of increased offshore developer headcount and support services in effort to support the acceleration and expansion of the FSMA 204 initiative. Given the demand in traceability the Company has also expended additional resources on further upgrading its security and confidentiality to increase protection of customer data.
Previous wording
Sales and marketing expense was $2,769,878 and $2,427,071 for the six months ended December 31, 2023 and 2022, respectively, a 14% increase. The increase in sales and marketing expense was primarily the result of an increase in trade show expense, investment in FSMA 204 traceability marketing, and higher sales travel expense. As the pandemic continues to abate, many customers and prospects are returning to the “new normal” requiring in person meetings. The largest contributor to the increase in sales and marketing expense has been an increase in travel cost and trade shows. We believe this trend will continue as many of our trading partners and industry associations will continue to require our assistance in addressing their compliance and supply chain needs.
Current wording
Sales and marketing expense was $4,119,716 and $3,667,017 for the nine months ended March 31, 2024 and 2023, respectively, a 12% increase. The increase in sales and marketing expense was primarily the result of an increase in commission, trade show expense, investment in FSMA 204 traceability marketing, and higher sales travel expense. As the pandemic continues to abate, customers and prospects are returning to in person meetings. The largest contributors to the increase in sales and marketing expense has been an increase in commission and FSMA 204 traceability marketing. We believe the uptick in marketing costs will flatten over the next twelve months as awareness of the 2026 traceability regulatory deadline approaches.
Previous wording
Depreciation and amortization expense was $608,903 and $465,166 for the six months ended December 31, 2023 and 2022, respectively, an increase of 31%. The increase was due to additional assets acquired in the prior fiscal year. Given the rising global hacks on software companies, banks, and financial institutions, we spent approximately $420,000 on security, backup, storage, and redundancy. The upgrades were financed through a leasing agent with an effective APR rate of 4.45%.
Current wording
Depreciation and amortization expense was $897,479 and $771,030 for the nine months ended March 31, 2024 and 2023, respectively, an increase of 16%. The increase was due to additional assets acquired in the prior fiscal year. Given the rising global hacks on software companies, banks, and financial institutions, we spent approximately $420,000 on security, backup, storage, and redundancy. The upgrades were financed through a leasing agent with an effective APR rate of 4.45%.
Previous wording
Net other income was $603,328 for the six months ended December 31, 2023, compared to net other income of $266,874 for the six months ended December 31, 2022. Other income increased due to an increase in interest income attributable to elevated interest rates on fixed income instruments on excess cash. When the Federal Reserve begins to cut rates in the future, it is unlikely the Company will be able to maintain the same interest income on its existing cash balances without taking additional credit risk.
Current wording
Net other income was $951,412 for the nine months ended March 31, 2024, compared to net other income of $568,112 for the nine months ended March 31, 2023. Other income increased due to an increase in interest income attributable to higher interest rates on fixed income instruments on excess cash. When the Federal Reserve begins to cut rates in the future, it is unlikely the Company will be able to maintain the same interest income on its existing cash balances without taking additional credit risk.
Previous wording
Dividends accrued on the Company’s Series B-1 Preferred was $293,222 for the six months ended December 31, 2023 and for the six months ended December 31, 2022. Dividends remained flat in the comparable periods.
Current wording
Dividends accrued on the Company’s Series B-1 Preferred was $427,567 and $439,833 for the nine months ended March 31, 2024 and 2023, respectively. Dividends decreased due to the redemption of Preferred Stock.
Previous wording
We have historically funded our operations with cash from operations, equity financings, and borrowings from our existing line of credit with U.S. Bank N.A. (the “Bank”), which was revised on October 6, 2021, and again in 2022.
Current wording
We have historically funded our operations with cash from operations, equity financings, and borrowings from our existing line of credit with U.S. Bank N.A. (the “Bank”), which was revised on October 6, 2021, and again in 2022. In March 2024, given our strong financial position, we terminated the credit facility with our bank.
Previous wording
Net cash provided by operating activities for the six months ended December 31, 2023 was $2,451,947 as compared to net cash provided by operating activities of $3,299,992 for the six months ended December 31, 2022. Net cash provided by operating activities decreased 26% due principally to an increase in accounts receivable and a decrease in accounts payable. Noncash expense decreased by $43,371 in the six months ended December 31, 2023, compared to six months ended December 31, 2022 as a result of a decrease in bad debt expense and stock compensation expense offset by an increase in depreciation and amortization.
Current wording
Net cash provided by operating activities for the nine months ended March 31, 2024 was $4,910,741 as compared to net cash provided by operating activities of $7,065,890 for the nine months ended March 31, 2023. Net cash provided by operating activities decreased 31% due principally to an increase in accounts receivable and a decrease in accounts payable. Noncash expense decreased by $900,863 in the nine months ended March 31, 2024, compared to nine months ended March 31, 2023 as a result of a decrease in bad debt expense and stock compensation expense offset by an increase in depreciation and amortization.
Previous wording
Net cash used in investing activities for the six months ended December 31, 2023 was $16,427 compared to net cash used in investing activities of $270,854 for the six months ended December 31, 2022. This decrease in cash used in investing activities for the six months ended December 31, 2023 was due to purchases of property and equipment in the prior fiscal year during the six months ended December 31, 2022 that did not occur in the same period in 2023.
Current wording
Net cash used in investing activities for the nine months ended March 31, 2024 was $48,538 compared to net cash used in investing activities of $903,187 for the nine months ended March 31, 2023. This decrease in cash used in investing activities for the nine months ended March 31, 2024 was due to capitalization of certain software costs and purchases of property and equipment in the prior fiscal year that did not occur in the nine months ended March 31, 2024.
Previous wording
Net cash used in financing activities totaled $3,173,328 for the six months ended December 31, 2023, as compared to cash used in financing activities of $3,089,831 for the six months ended December 31, 2022. The increase in net cash used in financing activities is primarily attributable to the payment of Common Stock dividends, the purchase of Common Stock under the Share Repurchase Program, and the redemption and retirement of shares of Preferred Stock offset by decrease in cash payments due to the payoff of our line of credit arrangement with the Bank in the prior fiscal year.
Current wording
Net cash used in financing activities totaled $4,400,402 for the nine months ended March 31, 2024, as compared to cash used in financing activities of $4,682,158 for the nine months ended March 31, 2023. The decrease in cash used in financing activities is due to the payoff of our line of credit arrangement with the Bank in the prior fiscal year offset by net cash used in financing activities for the payment of Common Stock dividends, the purchase of Common Stock under the Share Repurchase Program, and the redemption and retirement of shares of Preferred Stock.
Previous wording
At December 31, 2023, the Company had positive working capital of $23,298,163, as compared with positive working capital of $23,042,199 at June 30, 2023. This $255,964 increase in working capital is primarily due to an increase in accounts receivable and decrease in prepaid and other assets offset by a decrease in contract liabilities and an increase in deferred revenue. Cash and cash equivalents also decreased due to payment of quarterly Preferred Stock dividends, quarterly Common Stock dividend, buyback of Common Stock, and the redemption and retirement of Preferred Stock.
Current wording
At March 31, 2024, the Company had positive working capital of $24,182,808, as compared with positive working capital of $23,042,199 at June 30, 2023. This $1,140,609 increase in working capital is primarily due to an increase in accounts receivable and decrease in prepaid and other assets offset by a decrease in contract liabilities and an increase in deferred revenue. Cash and cash equivalents also increased due to cash receipts from customers who have signed up for, among other offerings, the ReposiTrak Traceability Network.
Previous wording
Current assets totaled $27,569,568 as of December 31, 2023, as compared to $27,274,620 as of June 30, 2023. The increase in current assets is primarily attributable to the decrease in cash, prepaid expense and other current assets offset by an increase in accounts receivables.
Current wording
Current assets totaled $28,827,713 as of March 31, 2024, as compared to $27,274,620 as of June 30, 2023. The increase in current assets is primarily attributable to the increase in cash and accounts receivables offset by a decrease of prepaid expense and other current assets.
Previous wording
Current liabilities totaled $4,271,405 as of December 31, 2023 as compared to $4,232,421 as of June 30, 2023. The increase in current liabilities is primarily attributable to the increase in deferred revenue offset by a decrease in accounts payable and financing lease liabilities. As of December 31, 2023, the Company has zero bank debt.
Current wording
Current liabilities totaled $4,644,905 as of March 31, 2024 as compared to $4,232,421 as of June 30, 2023. The increase in current liabilities is primarily attributable to the increase in deferred revenue offset by a decrease in accrued liabilities and financing lease liabilities. As of March 31, 2024, the Company had zero bank debt.
Previous wording
While no assurances can be given, management currently believes that the Company will continue to increase its cash flow from operations and working capital position in subsequent periods. The Company’s increase in anticipated cash flow from operations and working capital position is expected to be offset by the use of cash required to fund the Company’s quarterly cash dividends of $0.015 per share, announced on September 28, 2022, December 30, 2022, February 10, 2023, March 21, 2023, June 20, 2023, September 19, 2023, and of $0.0165 per share, announced on December 12, 2023, as well as the redemption and retirement of the Company’s Series B Convertible Preferred Stock and Series B-1 Preferred Stock (together, the “Preferred Stock”) 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”).
Current wording
While no assurances can be given, management currently believes that the Company will continue to increase its cash flow from operations and working capital position in subsequent periods. The Company’s increase in anticipated cash flow from operations and working capital position is expected to be offset by the use of cash required to fund the Company’s quarterly cash dividends of $0.015 per share, announced on September 28, 2022, December 30, 2022, February 10, 2023, March 21, 2023, June 20, 2023, September 19, 2023, and of $0.0165 per share, announced on December 12, 2023 and March 18, 2024, as well as the redemption and retirement of the Company’s Series B Convertible Preferred Stock and Series B-1 Preferred Stock (together, the “Preferred Stock”) 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”).
Previous wording
The Preferred Redemption is to occur over the next three years from August 29, 2023. As of December 31, 2023, a total of zero shares of Series B Preferred and 70,093 shares of Series B-1 Preferred were redeemed and retired, for aggregate consideration of $0 and $749,995 in the case of Series B Preferred and Series B-1 Preferred, respectively. The Company believes it will have adequate cash resources to fund its operations, satisfy its debt obligations, and fund its anticipated quarterly cash dividends and Preferred Redemption for at least the next 12 months.
Current wording
The Preferred Redemption is to occur over the next three years from August 29, 2023. 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. The Company believes it will have adequate cash resources to fund its operations, satisfy its debt obligations, and fund its anticipated quarterly cash dividends and Preferred Redemption for at least the next 12 months.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Cost of services and product support was $973,287 and $866,642 for the three months ended December 31, 2023 and 2022, respectively, a 12% increase. This $106,645 increase is primarily the result of increased developer headcount and support services in effort to support the acceleration and expansion of the FSMA 204 initiative. Given the demand in traceability, the Company expended additional resources on further upgrading its security and confidentiality protocols to increase protection of customer data.
Previous report — wording carried elsewhere
Depreciation and amortization expense was $299,958 and $229,160 for the three months ended December 31, 2023 and 2022, respectively, an increase of 31%. The increase was due to additional assets acquired in the prior fiscal year. Given the rising global hacks on software companies, banks, and financial institutions, we spent approximately $420,000 on security, backup, storage, and redundancy. We believe this spending for hardware and software will continue for the foreseeable future as we continue to invest in our technology infrastructure, data warehousing and security initiatives. The upgrades were financed through a leasing agent with an effective APR rate of 4.45%.