ReposiTrak, Inc.

Previous wording

On September 19, 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 November 13, 2024, which were paid to shareholders of record on or about December 31, 2024. Based on the closing prices on December 31, 2024, this represented an annual dividend yield of approximately 0.31%. Subsequent dividends will be paid within 45 days of each fiscal quarter end.

Current wording

On March 21, 2025, The Company's Board of Directors declared a quarterly cash dividend of $0.01815 per share ($0.0726 per year), payable to shareholders of record on March 31, 2025, which were paid to shareholders of record on or about May 15, 2025. Based on the closing prices on March 31, 2025, this represented an annual dividend yield of approximately 0.33%. Subsequent dividends will be paid within 45 days of each fiscal quarter end.

Previous wording

In November 2022, the FDA announced the final rule on the Food Safety Modernization Act Section 204(d) (“FSMA 204”) - Traceability for High-Risk Foods. On January 20, 2023, the rule became effective and applies to any person or Company that manufactures, processes, packs or hold foods the FDA considers to be high risk for food borne illness, the so-called Food Traceability List (“FTL”). The FTL is comprised of 16 product categories of food, which represent thousands of products commonly sold in grocery and convenience stores, and all restaurants. As a result, every grocery distributor, wholesaler and retailer, and the food service supply chain, must now institute a traceability program that enables the capture, creation and sharing of specific Key Data Elements (“KDEs”) prescribed by the FDA and required for traceability, at each designated Critical Tracking Event (“CTE”) in the supply chain, for thousands of items.

Current wording

On January 20, 2023, the rule became effective and applies to any person or Company that manufactures, processes, packs or hold foods the FDA considers to be high risk for food borne illness, the so-called Food Traceability List (“FTL”). The FTL is comprised of 16 product categories of food, which represent thousands of products commonly sold in grocery and convenience stores, and all restaurants. As a result, every grocery distributor, wholesaler and retailer, and the food service supply chain, must now institute a traceability program that enables the capture, creation and sharing of specific Key Data Elements (“KDEs”) prescribed by the FDA and required for traceability, at each designated Critical Tracking Event (“CTE”) in the supply chain, for thousands of items.

Previous wording

FSMA 204 requires the traceability data records to be stored for two years, and be retrievable such that specific data records can be presented within 24 hours of a request from the FDA. FSMA 204 is ultimately about supply chain data recording record keeping, resulting is an enormous amount of data to manage, across more than one million supply chain and retail facilities. The deadline for compliance with FSMA 204 is January 20, 2026, and nearly every company impacted will require some type of technical systems support to meet the requirement.

Current wording

FSMA 204 requires the traceability data records to be stored for two years, and be retrievable such that specific data records can be presented within 24 hours of a request from the FDA. FSMA 204 is ultimately about supply chain data recording record keeping, resulting is an enormous amount of data to manage, across more than one million supply chain and retail facilities.

Previous wording

Traceability is, by definition, a supply chain data management issue, which is ReposiTrak’s core expertise. That is why we have made it our goal to develop a traceability solution that is easy, inexpensive and meets FDA’s requirements. The ReposiTrak Traceability Network (“RTN”) is a growing traceability solution, connecting thousands of supplier locations to thousands of food wholesaler and retail locations, using low cost, easy to deploy technology, on the ReposiTrak platform. As the largest connected network of food suppliers, wholesalers and retailers in the world, the ReposiTrak Traceability Network is positioned to provide end-to-end traceability to provide a safer food supply chain, tighten controls on food waste, and implement a food recall response that saves lives and money.

Current wording

Traceability is, by definition, a supply chain data management issue, which is ReposiTrak’s core expertise. That is why we developed a traceability solution that is easy, inexpensive and meets FDA’s requirements. The ReposiTrak Traceability Network (“RTN”) is a growing traceability solution, connecting thousands of supplier locations to thousands of food wholesaler and retail locations, using low cost, easy to deploy technology, on the ReposiTrak platform. As the largest connected network of food suppliers, wholesalers and retailers in the world, the RTN is positioned to provide end-to-end traceability to provide a safe food supply chain, tighten controls on food waste, and implement a food recall response that saves lives and money.

Previous wording

Revenue was $5,490,908 and $5,125,751 for the three months ended December 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. These include compliance, supply chain and traceability. Growth in traceability 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 has resulted in mandates from the retailers to its suppliers. As more and more retailers, wholesalers and distributors mandate their requirements to suppliers, the Company continues to see a corresponding rise in demand for its services.

Current wording

Revenue was $5,913,732 and $5,084,866 for the three months ended March 31, 2025 and 2024, respectively, a 16% increase year-over-year. The increase in revenue was due to growth in recurring subscription revenue in all lines of business. These include compliance, supply chain and traceability. Growth in traceability 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 has resulted in tighter mandates from the retailers to its suppliers. As more and more retailers, wholesalers and distributors mandate their requirements to suppliers, the Company continues to see 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, 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.

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 an insignificant percentage of customers that will, from time to time, require buying a particular service outright (i.e., a license). We have and will continue to deemphasize non-recurring transactional revenue when we are able.

Previous wording

Cost of services and product support was $1,002,556 and $973,287 for the three months ended December 31, 2024 and 2023, respectively, a 3% increase. This $29,269 increase is primarily the result of development to accelerate automation of onboarding and support services in effort to support the scale and expansion of the FSMA 204 initiative. Given the demand in traceability the Company has also expended additional resources on further upgrading its cyber security services to increase protection of customer data.

Current wording

Cost of services and product support was $911,693 and $831,912 for the three months ended March 31, 2025 and 2024, respectively, a 10% increase. This $79,781 increase is primarily the result of development personnel to accelerate automation of onboarding and support services in effort to support the scale and expansion of the FSMA 204 initiative. The demand in traceability requires additional offshore resources to further accelerate the systematic onboarding of customers with little if any human intervention.

Previous wording

Sales and marketing expense was $1,455,036 and $1,264,377 for the three months ended December 31, 2024 and 2023, respectively, a 15% increase. The increase in sales and marketing expense was primarily the result of higher sales commissions, sales travel, and investment in marketing for our suite of services. The largest contributors to the increase in sales and marketing expense has been an increase in commission due to higher sales and FSMA 204 traceability awareness marketing. We believe the uptick in marketing spending will flatten over the next twelve months as awareness of the 2026 traceability regulatory deadline approaches. However, we believe corresponding commission may represent 8% of incremental revenue as the acceleration of revenue will lead to higher sales commissions.

Current wording

Sales and marketing expense was $1,408,861 and $1,349,838 for the three months ended March 31, 2025 and 2024, respectively, a 4% increase. The increase in sales and marketing expense was primarily the result of higher sales commissions, sales travel, and investment in marketing for our suite of services. The increase in sales and marketing expense has been the result of commission due to higher sales and FSMA 204 traceability awareness marketing. We believe the uptick in marketing spending will flatten over the next twelve months as awareness of the traceability regulatory deadline approaches and the industry continues to mandate early adoption.

Previous wording

General and administrative expense was $1,376,553 and $1,347,278 for the three months ended December 31, 2024 and 2023, respectively, a 2% increase. The increase in general and administrative expense was primarily due to higher employee benefit costs, general liability insurance, D&O insurance, and higher payroll taxes due to an increase in sales commissions.

Current wording

General and administrative expense was $1,455,602 and $1,352,197 for the three months ended March 31, 2025 and 2024, respectively, an 8% increase. The increase in general and administrative expense was primarily due to higher employee benefit costs, general liability insurance, D&O insurance, and higher payroll taxes due to an increase in sales commissions.

Previous wording

Depreciation and amortization expense was $304,712 and $299,958 for the three months ended December 31, 2024 and 2023, respectively, a increase of 2%. The increase was due to the addition of certain assets obtained with financing arrangements in the current fiscal year to expand into our newest Reno, NV data center. The Company now has two data centers in Las Vegas, NV and Reno, NV. We believe the expansion will significantly increase speed, redundancy and storage capacity for the increase in the demand for our services.

Current wording

Depreciation and amortization expense was $328,723 and $288,576 for the three months ended March 31, 2025 and 2024, respectively, a increase of 14%. The increase was due to the addition of certain assets obtained with financing arrangements in the current fiscal year to expand into our newest Reno, NV data center. The Company now has two data centers in Las Vegas, NV and Reno, NV. We believe the expansion will significantly increase speed, redundancy and storage capacity for the increase in the demand for our services.

Previous wording

Net other income was $686,228 for the six months ended December 31, 2024, compared to net other income of $603,328 for the six months ended December 31, 2023. Other income increased due to higher cash balances and an increase in interest income attributable to higher earnings on fixed income instruments. In September 2024, the Federal Reserve began cutting interest rates, which reductions make it 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 $306,866 for the three months ended March 31, 2025, compared to net other income of $348,084 for the three months ended March 31, 2024. Other income decreased due to a decrease in interest income attributable to earnings on fixed income instruments. In September 2024, the Federal Reserve began cutting interest rates, which reductions make it unlikely the Company will be able to maintain the same interest income on its existing cash balances without taking additional credit risk.

Previous wording

Preferred dividends accrued on the Company’s Preferred Stock was $95,616 for the three months ended December 31, 2024 and $146,611 for the three months ended December 31, 2023. Dividends decreased due to the redemption and retirement of Preferred Stock since the inception of the redemption plan that commenced in fiscal 2024. Although no assurances can be given, the Company announced that it intends to redeem all of the Series B and B-1 Preferred stock over three years which commenced August of 2023. Since inception, a total of 361,493 Preferred shares, including Series B and Series B-1, at the redemption price of $10.70 per share have been redeemed for a total of $3,867,975.

Current wording

Preferred dividends accrued on the Company’s Preferred Stock was $85,725 for the three months ended March 31, 2025 and $134,345 for the three months ended March 31, 2024. Dividends decreased due to the redemption and retirement of Preferred Stock since the inception of the redemption plan that commenced in fiscal 2024. Although no assurances can be given, the Company announced that it intends to redeem all of the Series B and B-1 Preferred stock over three years which commenced August of 2023. Since inception, a total of 431,586 shares of Preferred Stock, including Series B and Series B-1 Preferred, at the redemption price of $10.70 per share, have been redeemed for a total of $4,617,970.

Previous wording

Comparison of the Six Months Ended December 31, 2024 to the Six Months Ended December 31, 2023.

Current wording

Comparison of the Nine Months Ended March 31, 2025 to the Nine Months Ended March 31, 2024.

Previous wording

Revenue was $10,932,050 and $10,185,863 for the six months ended December 31, 2024 and 2023, respectively, a 7% increase year-over-year. The increase in revenue was due to growth in recurring subscription revenue growth in all lines of business. These include compliance, supply chain and traceability. Growth in traceability 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 has resulted in mandates from the retailers to its suppliers. As more and more retailers, wholesalers and distributors mandate their requirements to suppliers, the Company continues to see a corresponding rise in demand for its services.

Current wording

Revenue was $16,845,782 and $15,270,729 for the nine months ended March 31, 2025 and 2024, respectively, a 10% increase year-over-year. The increase in revenue was due to growth in recurring subscription revenue growth in all lines of business. These include compliance, supply chain and traceability. Growth in traceability 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 has resulted in mandates from the retailers to its suppliers. As more and more retailers, wholesalers and distributors mandate their requirements to suppliers, the Company continues to see a corresponding rise in demand for its services.

Previous wording

Cost of services and product support was $1,861,775 and $1,739,621 for the six months ended December 31, 2024 and 2023, respectively, a 7% increase. This $122,154 increase is primarily the result of development to accelerate automation of onboarding and support services in effort to support the scale and expansion of the FSMA 204 initiative. Given the demand in traceability the Company has also expended additional resources on further upgrading its cyber security services to increase protection of customer data.

Current wording

Cost of services and product support was $2,773,468 and $2,571,533 for the nine months ended March 31, 2025 and 2024, respectively, a 8% increase. This $201,935 increase is primarily the result of development personnel costs to accelerate automation of onboarding and support services in effort to support the scale and expansion of the FSMA 204 initiative. The demand in traceability requires additional offshore resources to further accelerate the systematic onboarding of customers with little if any human intervention.

Previous wording

Sales and marketing expense was $2,984,136 and $2,769,878 for the six months ended December 31, 2024 and 2023, respectively, a 8% increase. The increase in sales and marketing expense was primarily the result of higher sales commissions, sales travel, and investment in marketing for our suite of services. The largest contributors to the increase in sales and marketing expense has been an increase in commission and FSMA 204 traceability awareness marketing. We believe the uptick in marketing costs will flatten over the next twelve months as awareness of the 2026 traceability regulatory deadline approaches. However, we believe sales commissions will continue to reflect 8% of incremental revenue.

Current wording

Sales and marketing expense was $4,392,997 and $4,119,716 for the nine months ended March 31, 2025 and 2024, respectively, a 7% increase. The increase in sales and marketing expense was primarily the result of higher sales commissions, sales travel, and investment in marketing for our suite of services. The largest contributors to the increase in sales and marketing expense has been an increase in commission and FSMA 204 traceability awareness marketing. We believe the uptick in marketing costs will flatten over the next twelve months as awareness of the traceability regulatory deadline approaches.

Previous wording

General and administrative expense was $2,669,104 and $2,626,601 for the six months ended December 31, 2024 and 2023, respectively, a 2% increase. The increase in general and administrative expense was primarily due to higher employee benefit costs, general liability insurance, D&O insurance, and payroll taxes.

Current wording

General and administrative expense was $4,124,706 and $3,978,798 for the nine months ended March 31, 2025 and 2024, respectively, a 4% increase. The increase in general and administrative expense was primarily due to higher employee benefit costs, general liability insurance, D&O insurance, and payroll taxes.

Previous wording

Depreciation and amortization expense was $584,923 and $608,903 for the six months ended December 31, 2024 and 2023, respectively, a decrease of 4%. The decrease was due to certain assets that have been fully depreciated or amortized offset by investments in our newest data center in Reno, NV.

Current wording

Depreciation and amortization expense was $913,646 and $897,479 for the nine months ended March 31, 2025 and 2024, respectively, a increase of 2%. The increase was due to investments in our newest data center in Reno, NV.

Previous wording

Net other income was $351,134 for the three months ended December 31, 2024, compared to net other income of $324,325 for the three months ended December 31, 2023. Other income increased due to higher cash balances and an increase in interest income attributable to higher earnings on fixed income instruments. In September 2024, the Federal Reserve began cutting interest rates, which reductions make it 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 $933,094 for the nine months ended March 31, 2025, compared to net other income of $951,412 for the nine months ended March 31, 2024. Other income increased due to higher cash balances and an increase in interest income attributable to higher earnings on fixed income instruments. In September 2024, the Federal Reserve began cutting interest rates, which reductions make it unlikely the Company will be able to maintain the same interest income on its existing cash balances without taking additional credit risk.

Previous wording

Preferred dividends accrued on the Company’s Preferred Stock was $203,498 for the six months ended December 31, 2024 and $293,222 for the six months ended December 31, 2023. Dividends decreased due to the redemption and retirement of Preferred Stock. Although no assurances can be given, the Company announced that it intends to redeem all of the Series B and B-1 Preferred stock over three years which commenced August of 2023. Since inception, a total of 361,493 Preferred shares, including Series B and Series B-1, at the redemption price of $10.70 per share have been redeemed for a total of $3,867,975.

Current wording

Preferred dividends accrued on the Company’s Preferred Stock was $289,223 for the nine months ended March 31, 2025 and $427,567 for the nine months ended March 31, 2024. Dividends decreased due to the redemption and retirement of Preferred Stock. Although no assurances can be given, the Company announced that it intends to redeem all of the Series B and B-1 Preferred stock over three years which commenced August of 2023. Since inception, a total of 431,586 shares of Preferred Stock, including Series B and Series B-1 Preferred, at the redemption price of $10.70 per share, have been redeemed for a total of $4,617,970.

Previous wording

Cash was $28,041,398 and $25,153,862 at December 31, 2024 and June 30, 2024, respectively. This 11% increase is primarily the result of higher revenue and the corresponding cash receipts from customers who in many cases are required to pay annual subscriptions in advance generating higher cash balances in advance of higher revenue. It also includes higher earnings associated with a growing cash balance.

Current wording

Cash was $28,134,321 and $25,153,862 at March 31, 2025 and June 30, 2024, respectively. This 12% increase is primarily the result of higher revenue and the corresponding cash receipts from customers who in many cases are required to pay annual subscriptions in advance generating higher cash balances in advance of higher revenue. It also includes higher earnings associated with a growing cash balance and the resulting interest income.

Previous wording

Net cash provided by operating activities for the six months ended December 31, 2024 was $5,328,630 compared to net cash provided by operating activities of $2,451,947 for the six months ended December 31, 2023. Net cash provided by operating activities increased 117% due principally to an increase in deferred revenue and collections due to higher revenues from traceability customers who in most cases are required to pay for their annual subscription in advance. Noncash expense in the quarter increased by $159,148 in the six months ended December 31, 2024, compared to six months ended December 31, 2023 as a result of bad debt expense and stock compensation expense offset by a decrease in depreciation and amortization.

Current wording

Net cash provided by operating activities for the nine months ended March 31, 2025 was $6,763,371 compared to net cash provided by operating activities of 4,910,741 for the nine months ended March 31, 2024. Net cash provided by operating activities increased 38% due principally to an increase in deferred revenue and collections due to higher revenues from traceability customers who in most cases are required to pay for their annual subscription in advance. Noncash expense in the quarter increased by $284,881 in the nine months ended March 31, 2025, compared to nine months ended March 31, 2024 as a result of bad debt expense, stock compensation expense and a increase in depreciation and amortization.

Previous wording

Net cash provided by investing activities for the six months ended December 31, 2024 was $18,869 compared to net cash used in investing activities of $16,427 for the six months ended December 31, 2023. This increase in cash provided by investing activities for the six months ended December 31, 2024 was due to the sale of marketable securities.

Current wording

Net cash provided by investing activities for the nine months ended March 31, 2025 was $6,315 compared to net cash used in investing activities of $48,538 for the nine months ended March 31, 2024. This increase in cash provided by investing activities for the nine months ended March 31, 2025 was due to the sale of marketable securities.

Previous wording

Net cash used in financing activities totaled $2,459,963 for the six months ended December 31, 2024, compared to cash used in financing activities of $3,173,328 for the six months ended December 31, 2023. The decrease in net cash used in financing activities is due the decrease in our buyback of Common stock offset by the increased redemption of Preferred stock during the period.

Current wording

Net cash used in financing activities totaled $3,789,227 for the nine months ended March 31, 2025, compared to cash used in financing activities of $4,400,402 for the nine months ended March 31, 2024. The decrease in net cash used in financing activities is due the decrease in our buyback of Common Stock offset by the increased redemption of Preferred Stock during the period.

Previous wording

At December 31, 2024, the Company had positive working capital of $26,141,604, as compared with positive working capital of $24,757,025 at June 30, 2024. This $1,384,579 increase in working capital is primarily due to an increase in contract assets and a decrease in accounts receivables offset by a decrease in accrued liabilities and an increase in deferred revenue due to an increase in annual subscriptions. Cash and cash equivalents also increased due to cash receipts from customers who have signed up for, among other offerings, the ReposiTrak Traceability Network who in most cases pay in advance for their annual subscription.

Current wording

At March 31, 2025, the Company had positive working capital of $27,318,199 as compared with positive working capital of $24,757,025 at June 30, 2024. This $2,561,174 increase in working capital is primarily due to an increase in contract assets and a decrease in accounts receivables offset by a decrease in accrued liabilities and an increase in deferred revenue due to an increase in annual subscriptions. Cash and cash equivalents also increased due to cash receipts from customers who have signed up for, among other offerings, the ReposiTrak Traceability Network who in most cases pay in advance for their annual subscription.

Previous wording

Current assets totaled $32,394,539 as of December 31, 2024, as compared to $29,300,167 as of June 30, 2024. The increase in current assets is primarily attributable to the increase in cash and contract assets offset by a decrease of accounts receivables.

Current wording

Current assets totaled $32,752,375 as of March 31, 2025, as compared to $29,300,167 as of June 30, 2024. The increase in current assets is primarily attributable to the increase in cash and contract assets offset by a decrease of accounts receivables.

Previous wording

Current liabilities totaled $6,252,935 as of December 31, 2024 as compared to $4,543,142 as of June 30, 2024. The increase in current liabilities is primarily attributable to the increase in deferred revenue and addition of certain financing lease liabilities offset by a decrease in accrued liabilities. As of December 31, 2024, the Company had zero bank debt.

Current wording

Current liabilities totaled $5,434,176 as of March 31, 2025 as compared to $4,543,142 as of June 30, 2024. The increase in current liabilities is primarily attributable to the increase in deferred revenue and addition of certain financing lease liabilities offset by a decrease in accrued liabilities. As of March 31, 2025, the Company had zero bank debt.