ReposiTrak Inc

PARK CITY GROUP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 2024 and June 30, 2023

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

The Company’s services are grouped inthree application suites:

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

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

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

On* December 21, 2023,the Company effected a change of its corporate name from Park City Group, Inc. to ReposiTrak, Inc. The Company is incorporated in the State of Nevada and hastwo principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned) (“PCG Utah”), and Park City Group, Inc., a Delaware corporation (100% owned) (“PCG Delaware” and together with PCG Utah, the “Subsidiaries”). All intercompany transactions and balances have been eliminated in the Company’s consolidated financial statements, which contain the Company’s results from operations. The Company hasno* business operations separate from the operations conducted through its Subsidiaries.

The Company’s principal executive offices are located at5282 South Commerce Drive, SuiteD292, Murray, Utah84107. Its telephone number is (435)645-2000. Its website address is www.repositrak.com.

Principles of Consolidation

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

F-7

Use of Estimates

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

Concentration of Credit Risk and Significant Customers

The Company maintains cash in bank deposit accounts, which, at times,* mayexceed federally insured limits. The Company hasnot* experienced any losses in such accounts and believes it isnot exposed to any significant credit risk on cash and cash equivalents. Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing evaluations of its customers and maintains allowances for possible losses. The provision is based on the overall composition of our accounts receivable aging, our prior history of accounts receivable write-offs, and our experience with specific customers.

Other factors indicating significant risk include customers that have filed for bankruptcy or customers for which we have less payment history to rely upon. We rely on historical trends of bad debt as a percentage of total revenue and apply these percentages to the accounts receivable which when realized have been within the range of management’s expectations. The Company doesnot require collateral from its customers.

The Company’s accounts receivable are derived from sales of products and services primarily to customers operating multilocation retail and grocery stores. The Company writes off accounts receivable when they are determined to be uncollectible. Changes in the allowances for doubtful accounts are recorded as bad debt expense and are included in general and administrative expense in our consolidated financial statements. Amounts that have been invoiced are recorded in accounts receivable (current and long-term), and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

The Company hadone customer that accounted for greater than 10% of accounts receivable at* June 30, 2024*. The customer had a balance of $962,300 and $962,300 for* June 30, 2024* and* June 30, 2023*, respectively.

Prepaid Expense and Other Current Assets

Prepaid expense and other current assets include amounts for which payment has been made but the services havenot yet been consumed. The Company’s prepaid expense is made up primarily of prepayments for hosted software applications used in the Company’s operations, maintenance agreements on hardware and software, and other miscellaneous amounts for insurance, membership fees and professional fees. Prepaid expense is amortized on a pro-rata basis to expense accounts as the services are consumed typically by the passage of time or as the service is used.

Depreciation and Amortization

Depreciation and amortization of property and equipment is computed using the straight-line method based on the following estimated useful lives:

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Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of the improvements.

Amortization of intangible assets are computed using the straight-line method based on the following estimated useful lives:

Goodwill and intangible assets deemed to have indefinite lives are subject to annual impairment tests. Other intangible assets are amortized over their useful lives.

Warranties

The Company offers a limited warranty against software defects. Customers who arenot completely satisfied with their software purchase* mayattempt to be reimbursed for their purchases outside the warranty period. For the years ending June 30, 2024and2023*, the Company didnot incur any expense associated with warranty claims.

Adoption of ASC718, Compensation– Stock Compensation**

From time to time, the Company issues shares of common stock as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic718, Compensation–* Stock Compensation (“Topic718**”)*. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service or vesting period.

In prior periods through* September 30, 2019,the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC Subtopic505*-50, Equity–* Equity-based Payments to Non-employees*(“Subtopic505*-50*”). Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied to that estimate to determine the cumulative expense recorded.

The Company adopted Topic718 during thesecond quarter of fiscal year2020. Topic718 didnot have a material impact on the Company’s consolidated financial statements.

**Adoption of ASU2016-02 “Leases (Topic842)”

Under the new guidance, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.* The Company adopted the requirements of ASU2016*-02 utilizing the modified retrospective method of transition to identified leases as of* July 1, 2019 (the “Effective Date”). The recognition of additional operating lease liabilities was $82,517 for the current portion and $760,172 for the long-term portion and corresponding operating right-of-use assets were recorded in the amount of $842,689. This represents the operating lease existing as of the Effective Date which has a lease term ofthree* years with the option fortwo additional three-year terms.

On* June 21, 2018,the Company entered into an office lease at5282* South Commerce Drive SuiteD292, Murray, Utah84107, providing for the lease of approximately 9,800 square feet, commencing on* March 1, 2019.The monthly rent is $10,200. The initial term of the lease wasthree years. The Company had the option of renewing for an additionaltwo three*-year terms.

On* March 1, 2022,the Company exercised the option to renew the office lease for an additional three-year term. Terms of the lease were modified to reduce the space from 9,800 square feet to approximately 5,000 square feet commencing March 1, 2022.*The monthly rent was reduced to $5,871 per month with an annual increase of 3% each year. The Company has the option of renewing for an additional three-year term.

F-9

Revenue Recognition

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

The Company* mayenter into arrangements that consist of multiple performance obligations. Such arrangements mayinclude any combination of its deliverables. To the extent a contract includes multiple promised deliverables, the Company applies judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria arenot* met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, the Company allocates consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which the Company would sell a promised good or service separately to the customer. Whennot directly observable, the Company typically estimates standalone selling price by using the expected cost plus a margin approach. The Company typically establishes a standalone selling price range for its deliverables, which is reassessed on a periodic basis or when facts and circumstances change.

For performance obligations where control is transferred over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenue related to fixed-price contracts for application development and systems integration services, consulting or other technology services is recognized as the service is performed using the output method, under which the total value of revenue is recognized based on each contract’s deliverable(s) as they are completed and when value is transferred to a customer. Revenue related to fixed-price application maintenance, testing and business process services is recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in FASB ASC Topic606, Revenue from Contracts with Customers(“Topic606**”), paragraph606-10-55-18 (“ASC606*-10-55-18*”).

If the Company’s invoicing isnot consistent with the value delivered, revenue is recognized as the service is performed based on the method described above. The output method measures the results achieved and value transferred to a customer, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenue related to fixed-price hosting and infrastructure services is recognized based on the Company’s right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC606-10-55-18. If the Company’s invoicing isnot consistent with value delivered, revenue is recognized on a straight-line basis unless revenue is earned and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described above provides the most faithful depiction of performance towards satisfaction of the Company’s performance obligations.

Revenue related to the Company’s software license arrangements that donot require significant modification or customization of the underlying software is recognized when the software is delivered as control is transferred at a point in time. For software license arrangements that require significant functionality enhancements or modification of the software, revenue for the software license and related services is recognized as the services are performed in accordance with the methods described above. In software hosting arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a service. Revenue related to software maintenance and support is generally recognized on a straight-line basis over the contract period.

F-10

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

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

From time to time, the Company* mayenter into arrangements withthird* party suppliers to resell products or services. In such cases, the Company evaluates whether the Company is the principal (i.e., report revenue on a gross basis) or agent (i.e., report revenue on a net basis). In doing so, the Companyfirst evaluates whether it controls the good or service before it is transferred to the customer. If the Company controls the good or service before it is transferred to the customer, the Company is the principal; ifnot, the Company is the agent. Determining whether the Company controls the good or service before it is transferred to the customer* may*require judgment.

The Company provides customers with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications. General updates or patch fixes arenot considered an additional performance obligation in the contract.

Variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration to which we* maybe entitled. The Company includes in the transaction price variable consideration only to the extent it is probable that a significant reversal of revenue recognized willnot* occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price* may*involve judgment and is based largely on an assessment of its anticipated performance and all information that is reasonably available to the Company.

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

Trade Accounts Receivable and Contract Balances

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

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

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

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

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

Disaggregation of Revenue

The table below presents disaggregated revenue from contracts with customers by contract-type. All revenues for the years ending* June 30, 2024and2023* were generated from sales in North America. We believe this disaggregation best depicts the nature, amount, timing and uncertainty of our revenue and cash flows that* may*be affected by industry, market and other economic factors:

Software Development Costs

The Company accounts for research costs of computer software to be sold, leased or otherwise marketed as expense until technological feasibility has been established for the product. Once technological feasibility is established, the company will occasionally capitalize software costs until the product is available for general release to customers. In these instances, the Company determines technological feasibility for its software products to have been reached when a working prototype is complete and meets or exceeds design specifications including functions, features, and technical performance requirements.

Research and Development Costs

Research and development costs include personnel costs, engineering, consulting, and contract labor and are expensed as incurred for software that hasnot achieved technological feasibility.

F-12

Advertising Costs

Advertising is expensed as incurred. Advertising costs were approximately $22,625 and $20,735 for the years ended* June 30, 2024and2023*, respectively.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of temporary differences between tax bases and financial reporting bases of other assets and liabilities.

Earnings Per Share

Basic net income per common share (“Basic EPS”) excludes dilution and is computed by dividing net income applicable to common shareholders by the weighted average number of shares of the Company’s common stock, par value $0.01 (“Common Stock”) outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue shares of Common Stock were exercised or converted into Common Stock. The computation of Diluted EPS doesnot assume exercise or conversion of securities that would have an anti-dilutive effect on net income per share of Common Stock.

For the year ended* June 30, 2024*, warrants to purchase 1,108,805 shares of Common Stock were included in the computation of Diluted EPS, andno warrants to purchase shares of Common Stock were excluded the computation of Diluted EPS due to the anti-dilutive effect. For the year ended* June 30, 2023*, warrants to purchase1,085,068 shares of Common Stock were included in the computation of Diluted EPS, and warrants to purchase 23,737 shares of Common Stock were excluded the computation of Diluted EPS due to the anti-dilutive effect. Warrants to purchase shares of Common Stock were outstanding at prices ranging $4.00 from to $10.00 per share at* June 30, 2024*.

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

Stock-Based Compensation

The Company recognizes the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. The Company records compensation expense on a straight-line basis. The fair value of options granted are estimated at the date of grant using a Black-Scholes option pricing model with assumptions for the risk-free interest rate, expected life, volatility, dividend yield and forfeiture rate.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity oftwelve months or less to be cash equivalents. Cash and cash equivalents are stated at fair value.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, cash equivalents, receivables, payables, accruals and notes payable. The carrying amount of cash, cash equivalents, receivables, payables and accruals approximates fair value due to the short-term nature of these items. The notes payable also approximate fair value based on evaluations of market interest rates.

Available-for-Sale Debt Investments ** **

We classify our investments in fixed income securities as available-for-sale debt investments. Our available-for-sale debt investments primarily consist of U.S. government, U.S. government agency, non-U.S. government and agency, corporate debt, U.S. agency mortgage-backed securities, commercial paper and certificates of deposit. These available-for-sale debt investments are primarily held in the custody of a major financial institution. A specific identification method is used to determine the cost basis of available-for-sale debt investments sold. These investments are recorded in the Consolidated Balance Sheets at fair value. Unrealized gains and losses on these investments are included as a separate component of accumulated other comprehensive income (“AOCI”). We classify our investments as current based on the nature of the investments and their availability for use in current operations.

F-13

Impairment Consideration of Investments ** **

For our available-for-sale debt securities in an unrealized loss position, we determine whether a temporary or permanent credit loss exists. In this assessment, which requires judgment, among other factors, we consider the extent to which the fair value is less than the amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security. If factors indicate a permanent credit loss exists, an allowance for credit loss is recorded to other income (loss), net, limited by the amount that the fair value is less than the amortized cost basis. The amount of fair value change relating to all other factors will be recognized in other comprehensive income (“OCI”).

Accounts receivable consist of the following at* June 30:*

Accounts receivable consist of trade accounts receivable and unbilled amounts recognized as revenue during the year for which invoicing occurs subsequent to year-end. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met.

Property and equipment are stated at cost and consist of the following at* June 30:*

Depreciation expense for the years ended* June 30, 2024and2023* was $546,341 and $541,942, respectively.

Capitalized software costs consist of the following at* June 30:*

Amortization expense for the years ended* June 30, 2024and2023* was $313,659 and $185,452, respectively.

Customer relationships consist of the following at* June 30:*

Amortization expense for the years ended* June 30, 2024and2023* was $131,400 and $131,400, respectively.

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Accrued liabilities consist of the following at* June 30:*

On* October 6, 2021,the Company and U.S. Bank N.A. (the “Bank”) executed a Revolving Credit Agreement (the “Revolving Credit Agreement”) and accompanying addendum (the “Addendum”), and Stand-Alone Revolving Note (the “Note” and collectively with the Revolving Credit Agreement and Addendum, the “Credit Agreement”), with an effective date of September 30, 2021.*

The Credit Agreement replaced the Company’s prior $6.0 million Revolving Credit Agreement and Stand-Alone Revolving Note between the Company and the Bank, as amended and revised on* January 9, 2019,and provided the Company with a $10.0 million revolving line of credit that matured on March 31, 2023.The Credit Agreement contained customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, the Company must maintain liquid assets equal to $12 million and maintain a Senior Funded Debt (as defined in the Credit Agreement) to EBITDA Ratio (as defined in the Credit Agreement) ofnot* more than3:1.

On* April 28, 2023,the Company and the Bank executed an amendment to the Credit Agreement (the “Amendment”), with an effective date of March 31, 2023.The Amendment to the Credit Agreement sets forth that (1) the Company will increase its liquidity requirement from $10 million to $12 million, which the Company currently maintains over $22 million in cash and a current ratio of over6:1,* and (2) draws on the facility accrue interest at the annual rate, equal to 1.75% plus theone-month SOFR rate, instead of the previous LIBOR rate. As of* June 30, 2024*, the balance of the facility was zero. The Company hadzero bank debt at* June 30, 2024*.

On* March 15, 2024,given its strong financial position, the Company chosenot* to renew the Revolving Credit Agreement. There wereno amounts due at the time of renewal.

Furthermore, the Credit Agreement contains customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, the Company must maintain liquid assets equal to $12 million and maintain a Senior Funded Debt (as defined in the Credit Agreement) to EBITDA Ratio (as defined in the Credit Agreement) ofnot more than3:1.

Deferred revenue consisted of the following at* June 30:*

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Due to the tax rates being changed in2018 we have used a federal and state blended rate of 26%.

Net deferred tax liabilities consist of the following components at* June 30:*

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The income tax provision differs from the amounts of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended* June 30, 2024and2023* due to the following:

At* June 30, 2024*, the Company had net operating loss carryforwards of approximately $7,020,239 that* maybe offset against past and future taxable income from the year2024* forward. A significant portion of the net operating loss carryforwards began to expire in2019. No tax benefit has been reported in the* June 30, 2024* consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. In* Januaryof2009* the Company acquired Prescient Applied Intelligence, Inc. which had significant net operating loss carryforwards. Due to the change in ownership, Prescient’s (subsequently renamed Park City Group then ReposiTrak) net operating loss carryforwards* maybe limited as to use in future years. The limitation will be determined on a year-to-year basis. In Juneof2015* the Company acquired ReposiTrak, which had significant net operating loss carryforwards. Due to the change in ownership, ReposiTrak's net operating loss carryforwards* maybe limited as to use in future years. In Decemberof2023* ReposiTrak was merged into the Park City Group subsidiary (subsequently named ReposiTrak) which caused the remaining original ReposiTrak entity net operating loss carryforwards to be lost.

The Company determines whether it is more likely thannot that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, the Company measures the tax position to determine the amount to recognize in the financial statements. The Company performed a review of its material tax positions in accordance with these recognition and measurement standards.

The Company has concluded that there areno significant uncertain tax positions requiring disclosure, and there arenot material amounts of unrecognized tax benefits.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of* June 30, 2024*, the Company hadno accrued interest or penalties related to uncertain tax positions.

F-16

Leases

On* May 1, 2019,the Company completed the expansion of new equipment for the Company’s information technology infrastructure, buildout of its corporate headquarters, and expansion of its collocation data center, which it completed using approximately $1,269,000 (the “Lease Amount”) of funds provided by U.S. Bank to finance equipment and services related to the Company’s expansion and relocation pursuant to that certain lease agreement, originally entered into by and between the Company and U.S. Bank on January 9, 2019 (the “Lease Agreement”). Pursuant to the Lease Agreement, as of May 1, 2019,U.S. Bank is now leasing back the property and equipment purchased by the Company. Pursuant to the Lease Agreement, commencing May 1, 2019,the initial term of the lease shall be 48 months, the Lease Amount shall accrue interest at a rate of 5.0% per annum, and the Company shall be required to make monthly rental payments in the amount of approximately $29,097 per month. On July 30, 2020*the Company made an early repayment of the entire outstanding balance on the note payable due to U.S. Bank in the amount of $960,208. The repayment amount included $64,721 of accrued interest. No repayment penalties were incurred as a result of the transaction.

On* June 21, 2018the Company entered into an office lease at5282* South Commerce Drive SuiteD292, Murray, Utah84107, providing for the lease of approximately 9,800 square feet for a period ofthree years, commencing on* March 1, 2019.*The monthly rent is $10,200.

On* March 1, 2022,the Company exercised the option to renew the office lease for an additional three-year term. Terms of the lease were modified to reduce the space to approximately 5,000 square feet commencing March 1, 2022.*The monthly rent is $5,871 with an annual increase of 3% each year. The Company has the option of renewing for an additional three-year term.

Minimum future payments, including principal and interest, under the non-cancelable capital leases are as follows:

From time to time the Company* mayenter into or exit from diminutive operating lease agreements for equipment such as copiers, temporary back up servers, etc. These leases arenot* of a material amount and thus willnot in the aggregate have a material adverse effect on our business, financial condition, results of operation or liquidity.

The Company offers an employee benefit plan under Benefit Plan Section401(k) of the Internal Revenue Code. Employees who have attained the age of18 are eligible to participate. The Company, at its discretion,* maymatch employee’s contributions at a percentage determined annually by the Board of Directors. During the period, the Company didnot match contributions. There wereno expenses for the years ended June 30, 2024and2023*.

Officers and Directors Stock Compensation

Effective* October 2018,the Board of Directors approved the following compensation for directors who arenot* employed by the Company:

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Officers, Key Employees, Consultants and Directors Stock Compensation

In* January 2013,the Board of Directors approved the Second Amended and Restated2011* Stock Plan (the “Amended2011* Plan*”), which Amended2011 Plan was approved by shareholders on* March 29, 2013.Under the terms of the Amended2011* Plan, all employees, consultants and directors of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that* maybe granted under the Amended2011* Plan is 675,000 shares. The Company’s Amended2011 Plan terminated on* April 1, 2023,andno* new awards were granted under the2011 Plan thereafter. Awards outstanding under the2011 Plan remain subject to the2011 Plan. Any shares subject to outstanding awards under the2011 Plan that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares will automatically become available for issuance under the2023 Plan, as defined below.

In* August 2023,our Board of Directors approved the2023* Omnibus Equity Incentive Plan (the “2023 Plan”), which plan was approved by shareholders on* November 20, 2023.Under the terms of the2023* Plan, all employees, consultants and directors of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that* maybe granted under the2023* Plan is 400,000 shares. A Committee of independent members of the Company’s Board of Directors administers the2023 Plan.

In* August 2023,our Board of Directors approved the2023* Employee Stock Purchase Plan (the “2023 ESPP”), which plan was approved by shareholders on* November 20, 2023.Under the terms of the2023* ESPP, all full- and part-time employees of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that* maybe granted under the2023* ESPP is 50,000 shares. A Committee of independent members of the Company’s Board of Directors administers the2023 ESPP.

The Company issued0 and 38,291 shares to its directors during the years ended* June 30, 2024and2023*, respectively, under the Amended2011 Plan. The Company issued 0 and 43,523 shares to employees and consultants during the years ended* June 30, 2024and2023,* respectively, under the Amended2011 Plan.

The Company issued 18,978 and 0 shares to its directors during the years ended* June 30, 2024and2023*, respectively, under the2023 Plan. The Company issued 64,266 and 0 shares to employees and consultants during the years ended* June 30, 2024and2023,* respectively, under the2023 Plan.

The Company issued 19,635 and 0 shares to its employees during the years ended* June 30, 2024and2023*, respectively, under its2023 ESPP.

The Company holdsno treasury stock.

Vested and issued shares under the Amended2011 plan for the fiscal year ending* June 30, 2024* and* June 30, 2023* totaling 0 and 25,995, respectively, and vested and issued shares under the2023 Plan for the fiscal year ending* June 30, 2024* and* June 30, 2023* totaling 69,437 and 0, respectively are included in the roll-forward of restricted stock units below.

Restricted Stock Units

The number of restricted stock units outstanding at* June 30, 2024* includes 2,483 units that have vested but for which shares of Common Stock hadnot yet been issued pursuant to the terms of the agreement.

As of* June 30, 2024*, there was approximately $4.6 million of unrecognized stock-based compensation obligations under our equity compensation plans. The stock-based compensation obligation is in connection with certain employment agreements which have a deferral option at the Board’s discretion. At the end of the deferral period, the stock-based compensation expense associated with the obligation is expected to be recognized on a straight-line basis over a period ofthree years.

F-18

Warrants

Outstanding warrants were issued in connection with private placements of the Company’s Common Stock and with the restructuring of the Series B Preferred that occurred in* Marchof2018.* The following table summarizes information about fixed stock warrants outstanding at* June 30, 2024*:

Preferred Stock

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

The Company does business with some of the largest retailers and wholesalers in the world. Management believes the Series B-1 Preferred favorably impacts the Company’s overall cost of capital in that it is: (i) perpetual and, therefore, an equity instrument that positively impacts the Company’s coverage ratios; (ii) possesses a below market dividend rate relative to similar instruments; (iii) offers the flexibility of a paid-in-kind (PIK) payment option; and (iv) is without covenants. After exploring alternative options for redeeming the Series B-1* *Preferred, management determined that alternative financing options were materially more expensive, or would impair the Company’s net cash position, which management believes could cause customer concerns and negatively impact the Company’s ability to attract new business.

Preferred Redemption

Section4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “Series B-1 COD”) provides the Company’s Board of Directors with the right to redeem any or all of the outstanding shares of the Company’s Series B-1 Preferred for a cash payment of $10.70 per share at any time upon providing the holders of Series B-1 Preferred at leastten days written notice that sets forth the date on which the redemption will occur (the “Redemption Notice”).

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

As of* June 30, 2024*, a total of 616,470 shares of Series B Preferred and 0 shares of Series B-1 Preferred were issued and outstanding. Since inception, a total of 221,307 Preferred shares at the redemption price of $10.70 per share have been redeemed for a total of $2,367,985.

The following table provides information about the redemption and retirement of the Series B Preferred during the year ended* June 30, 2024*:

F-19

The following table provides information about the redemption and retirement of the Series B-1 Preferred during thethree months ended* June 30, 2024*:

Section4 of the Company’s First Amended and Restated Certificate of Designation of the Relative Rights, Powers and Preferences of the Series B-1 Preferred Stock, as amended (the “Series B-1 COD”) provides the Company’s Board of Directors with the right to redeem any or all of the outstanding shares of the Company’s Series B-1 Preferred for a cash payment of $10.70 per share at any time upon providing the holders of Series B-1 Preferred at leastten days written notice that sets forth the date on which the redemption will occur (the “Redemption Notice”).

As of* June 30, 2024*,* *a total of 616,470 shares of Series B Preferred and 0 shares of Series B-1 Preferred were issued and outstanding.

Share Repurchase Program

On* May 9, 2019,our Board of Directors approved the repurchase of up to $4.0 million in shares of our Common Stock, which repurchases maybe made in privately negotiated transactions or in the open market at prices per sharenot* exceeding the then-current market prices (the “Share Repurchase Program”). Under the Share Repurchase Program, management has discretion to determine the dollar amount of shares to be repurchased and the timing of any repurchases in compliance with applicable laws and regulations, including Rule10b-18 of the Exchange Act.

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

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

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

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

F-20

Since inception of the Share Repurchase Program through* June 30, 2024*, a total of $21,000,000 in shares of Common Stock have been approved under the Share Repurchase Program, and 2,122,703 shares of Common Stock have been repurchased at an average purchase price of $6.13, resulting in $7,992,206 remaining available to repurchase under the current Share Repurchase Program. From time-to-time, our Board of Directors* mayauthorize further increases to our Share Repurchase Program. In addition, the Share Repurchase Program may*also be suspended for periods of time or discontinued at any time, at the Board’s discretion.

The following table provides information about repurchases of our Common Stock registered pursuant to Section12 of the Exchange Act, during the years ended* June 30, 2024and2023*:

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

In* February 2016,the FASB issued ASU2016*-02 Leases (Topic842*)* (“ASU2016*-02*”). Under ASU2016-02, lessees will be required to recognize for all leases (with the exception of short-term leases) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Effective* July 1, 2019,the Company adopted the requirements of ASU2016*-02. All amounts and disclosures set forth in this Annual Report have been updated to comply with this new standard with results for reporting periods beginning after* July 1, 2019presented under ASU2016*-02, while prior period amounts and disclosures arenot adjusted and continue to be reported under the accounting standards in effect for the prior period.

Service Agreement. During the year ended* June 30, 2024*, the Company continued to be a party to a Service Agreement with Fields Management, Inc. (“FMI”), pursuant to which FMI provided certain executive management services to the Company, including designating Mr. Fields to perform the functions of President and Chief Executive Officer for the Company. Mr. Fields, FMI’s designated executive, who also serves as the Company’s Chair of the Board of Directors, controls FMI. The Company hadno payables to FMI at* June 30, 2024and2023* respectively, under the Service Agreement.

During the year ended* June 30, 2024*, the Company, the Company redeemed and retired and aggregate of $95,284 in Series B Preferred and $2,272,701 in Series B-1 Preferred from Mr. Randall K. Fields, affiliates of Mr. Fields, and Robert W. Allen. Mr. Allen is a director of the Company.

F-21

In accordance with the Subsequent Events Topic of the FASB ASC855, we have evaluated subsequent events, through the filing date and notedno events have occurred subsequent to* June 30, 2024*that are reasonably likely to impact the Company’s financial statements.