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What changed in ReposiTrak, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ReposiTrak, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+111 added−97 removedSource: 10-K (2023-09-28) vs 10-K (2022-09-28)

Top changes in ReposiTrak, Inc.'s 2023 10-K

111 paragraphs added · 97 removed · 79 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

28 edited+5 added−5 removed66 unchanged
Biggest changeWe seek to protect our software, documentation and other written materials primarily through a combination of patents, trademarks, and copyright laws, trade secret laws, confidentiality procedures and contractual provisions. While we have attempted to safeguard and maintain our proprietary rights, there are no assurances that we will be successful in doing so.
Biggest changeOur success depends on our ability to develop and protect existing and new proprietary technology and intellectual property rights. We seek to protect our software, documentation and other written materials primarily through a combination of patents, trademarks, and copyright laws, trade secret laws, confidentiality procedures and contractual provisions.
Future dividends may also be affected by covenants contained in loan or other financing documents, which we may execute in the future. Therefore, there can be no assurance that quarterly dividends will continue to be paid on our Common Stock. Our officers and directors have limited liability and indemnification rights under our organizational documents, which may impact our results.
Future dividends may also be affected by covenants contained in loan or other financing documents, which we may execute in the future. Therefore, there can be no assurance that quarterly dividends will continue to be paid on our Common Stock. 13 Our officers and directors have limited liability and indemnification rights under our organizational documents, which may impact our results.
Customers could also elect not to renew their subscription or delay or withhold payment to us. These potential scenarios, successful or otherwise, would likely be time consuming and costly. Interruptions or delays in service from our third-party data center hosting facility could impair the delivery of our service and harm our business.
Customers could also elect not to renew their subscription or delay or withhold payment to us. These potential scenarios, successful or otherwise, would likely be time-consuming and costly. 10 Interruptions or delays in service from our third-party data center hosting facility could impair the delivery of our service and harm our business.
As a result, the failure or perceived failure of our products to perform as expected could have a material adverse effect on our revenue, results of operations and business. If a customer is sued because of a recalled product, we could be joined in that suit, the defense of which would impair our operating results.
As a result, the failure or perceived failure of our products to perform as expected could have a material adverse effect on our revenue, results of operations and business. 9 If a customer is sued because of a recalled product, we could be joined in that suit, the defense of which would impair our operating results.
Fluctuations in our results of operations may be due to several factors, including, but not limited to, those listed and identified throughout this “ Risk Factors ” section. The limited public market for our Common Stock may adversely affect an investor ’ s ability to liquidate an investment in us.
Fluctuations in our results of operations may be due to several factors, including, but not limited to, those listed and identified throughout this “ Risk Factors ” section. 12 The limited public market for our Common Stock may adversely affect an investor ’ s ability to liquidate an investment in us.
Historically, we have not paid dividends on our Common Stock. Although we recently declared a quarterly cash dividend on our Common Stock, in the future we may elect to retain earnings, if any, to finance the development and expansion of our business.
Historically, we have not paid dividends on our Common Stock. Although we recently declared quarterly cash dividends on our Common Stock, in the future we may elect to retain earnings, if any, to finance the development and expansion of our business.
We face threats from competing and emerging technologies that may affect our profitability, as well as competitors that are larger and have greater financial and operational resources that may give them an advantage in the market .
We face threats from competing and emerging technologies that may affect our revenue growth and profitability, as well as competitors that are larger and have greater financial and operational resources that may give them an advantage in the market .
In addition, we may potentially experience significant fluctuations in future operating results caused by a variety of factors, many of which are outside of our control, including: ● our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements; ● the renewal rates for our subscriptions and other services; ● changes in our pricing policies, whether initiated by us or as a result of competition; ● the cost, timing and management effort for the introduction of new services, including new features to our existing services; ● the rate of expansion and productivity of our sales force; ● new product and service introductions by our competitors; ● variations in the revenue mix of editions or versions of our service; ● technical difficulties or interruptions in our service; ● general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay a prospective customer’s purchasing decision, or reduce the value of new subscription contracts or affect renewal rates; ● timing of additional expenses and investments in infrastructure to support growth in our business; ● regulatory compliance costs; ● consolidation in the food industry; ● the timing of customer payments and payment defaults by customers; ● extraordinary expenses such as litigation or other dispute-related settlement payments; ● the impact of new accounting pronouncements; ● the timing of stock awards to employees and the related financial statement impact; and ● system or service failures, security breaches or network downtime. -7- Table of Contents Future operating results may fluctuate because of the foregoing factors, making it difficult to predict operating results.
In addition, we may potentially experience significant fluctuations in future operating results caused by a variety of factors, many of which are outside of our control, including: ● our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements; 7 ● the renewal rates for our subscriptions and other services; ● changes in our pricing policies, whether initiated by us or as a result of competition; ● the cost, timing and management effort for the introduction of new services, including new features to our existing services; ● the rate of expansion and productivity of our sales force; ● new product and service introductions by our competitors; ● variations in the revenue mix of editions or versions of our service; ● technical difficulties or interruptions in our service; ● general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions or upgrade their services, or delay a prospective customer’s purchasing decision, or reduce the value of new subscription contracts or affect renewal rates; ● timing of additional expenses and investments in infrastructure to support growth in our business; ● regulatory compliance costs; ● consolidation in the food industry; ● the timing of customer payments and payment defaults by customers; ● extraordinary expenses such as litigation or other dispute-related settlement payments; ● the impact of new accounting pronouncements; ● the timing of stock awards to employees and the related financial statement impact; and ● system or service failures, security breaches or network downtime.
As of June 30, 2022, a total of 625,375 shares of Series B Preferred and 212,402 shares of Series B-1 Preferred were issued and outstanding.
As of June 30, 2023, a total of 625,375 shares of Series B Preferred and 212,402 shares of Series B-1 Preferred were issued and outstanding.
It may be difficult for us to assess risks associated with potential new product offerings: ● it may be difficult for us to predict the amount of service and technological resources that will be needed by customers of new offerings, and if we underestimate the necessary resources, the quality of our service will be negatively impacted, thereby undermining the value of the product to the customer; ● technological issues between us and our customers may be experienced in capturing data necessary for new product offerings, and these technological issues may result in unforeseen conflicts or technological setbacks when implementing these products, which could result in material delays and even result in a termination of the engagement; ● a customer’s experience with new offerings, if negative, may prevent us from having an opportunity to sell additional products and services to that customer; ● if customers do not use our products as recommends and/or fail to implement any needed corrective action(s), it is unlikely that customers will experience the business benefits from these products and may, therefore, be hesitant to continue the engagement as well as acquire any other products from us; and ● delays in proceeding with the implementation of new products for a new customer will negatively affect our cash flow and our ability to predict cash flow. -8- Table of Contents We cannot accurately predict renewal or upgrade rates and the impact these rates may have on our future revenue and operating results.
It may be difficult for us to assess risks associated with potential new product offerings: ● it may be difficult for us to predict the amount of service and technological resources that will be needed by customers of new offerings, and if we underestimate the necessary resources, the quality of our service will be negatively impacted, thereby undermining the value of the product to the customer; ● technological issues between us and our customers may be experienced in capturing data necessary for new product offerings, and these technological issues may result in unforeseen conflicts or technological setbacks when implementing these products, which could result in material delays and even result in a termination of the engagement; ● a customer’s experience with new offerings, if negative, may prevent us from having an opportunity to sell additional products and services to that customer; ● if customers do not use our products as recommends and/or fail to implement any needed corrective action(s), it is unlikely that customers will experience the business benefits from these products and may, therefore, be hesitant to continue the engagement as well as acquire any other products from us; and ● delays in proceeding with the implementation of new products for a new customer will negatively affect our cash flow and our ability to predict cash flow.
The issuance of an additional series of Preferred Stock could be used as a method of discouraging, delaying or preventing a change in control. -12- Table of Contents Historically, we have not paid dividends on our Common Stock, and, although we recently declared a quarterly cash dividend on our Common Stock, investors should consider the potential for us to terminate the payment of dividends as a factor when determining whether to invest in us.
The issuance of an additional series of Preferred Stock could be used as a method of discouraging, delaying or preventing a change in control. Although we have recently declared quarterly cash dividends on our Common Stock, investors should consider the potential for us to terminate the payment of dividends as a factor when determining whether to invest in us.
Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our service.
Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in our service. Even with the disaster recovery arrangements, our service could be interrupted.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation and cause a loss of confidence in our products and services, which could adversely affect our business/operating margins, revenues and competitive position.
Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation and cause a loss of confidence in our products and services, which could adversely affect our business/operating margins, revenues and competitive position. 11 The secure processing, maintenance and transmission of this information is critical to our operations and business strategy, and we devote significant resources to protecting our information.
We had net income of $4,003,095 for the year ended June 30, 2022, compared to a net income of $4,117,395 for the year ended June 30, 2021. Although we generated net income in the year ended June 30, 2022, there can be no assurance that we will achieve profitability in future periods.
We had net income of $5,590,289 for the year ended June 30, 2023, compared to a net income of $4,003,095 for the year ended June 30, 2022. Although we generated a year over year increase in net income in the year ended June 30, 2023, there can be no assurance that we will achieve profitability in future periods.
As a result, we are subject to the following risks: whether or how we will respond to technological changes in a timely or cost-effective manner; whether the products or technologies developed by our competitors will render our products and services obsolete or shorten the life cycle of our products and services; and whether our products and services will achieve market acceptance.
As a result, we are subject to the following risks: whether or how we will respond to technological changes in a timely or cost-effective manner; whether the products or technologies developed by our competitors will render our products and services obsolete or shorten the life cycle of our products and services; and whether our products and services will achieve market acceptance. 8 Moreover, many of our competitors are larger and have greater financial and operational resources than we do.
Even with the disaster recovery arrangements, our service could be interrupted. -10- Table of Contents If our security measures are breached and unauthorized access is obtained to a customer ’ s data, our data or our information technology systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.
If our security measures are breached and unauthorized access is obtained to a customer ’ s data, our data or our information technology systems, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.
If the uncertainty surrounding geopolitical conflicts and in the global marketplace continues, or if we, or any of our customers encounter any disruptions to our or their respective operations, facilities or stores, then we or they may be prevented or delayed from effectively operating our or their business, respectively, and the marketing and sale of our services and our financial results could be adversely affected. -11- Table of Contents Risks Relating to Our Common Stock Our quarterly results of operations may fluctuate in the future, which could result in volatility in the price of our Common Stock.
If the uncertainty surrounding geopolitical conflicts and in the global marketplace continues, or if we, or any of our customers encounter any disruptions to our or their respective operations, facilities or stores, then we or they may be prevented or delayed from effectively operating our or their business, respectively, and the marketing and sale of our services and our financial results could be adversely affected.
In September 2020, the FDA proposed a rule for Record Keeping for Food Traceability as part of the FSMA (“ FSMA 204 ”), which is scheduled to be finalized by November 7, 2022 and would go into effect on January 6, 2023. FSMA 204 will apply to all foods on the FDA’s Food Traceability List.
In September 2020, the FDA proposed a rule for Record Keeping for Food Traceability as part of the FSMA (“ FSMA 204 ”), which was published in November 2022 and went into effect in January 2023. FSMA 204 will apply to all foods on the FDA’s Food Traceability List.
We also depend on our partners to ensure proper labelling of products. Issues or concerns regarding product safety, labelling, content or quality could result in consumer or governmental claims. In limited circumstances, we sell merchandise that we have purchased.
We also depend on our partners to ensure proper labelling of products. Issues or concerns regarding product safety, labelling, content or quality could result in consumer or governmental claims. In limited circumstances, we sell merchandise that we have purchased. In these instances, we assume the risks related to inventory. We face risks associated with proprietary protection of our software.
Failure or delay in the implementation of Section 204(d) of the FSMA may slow the adoption of our technology as a compliance tool for FMSA 204.
The expenses associated with protecting our information could reduce our operating margins. Failure or delay in the implementation of Section 204(d) of the FSMA may slow the adoption of our technology as a compliance tool for FMSA 204.
Our customers have no obligation to renew their subscriptions for our service after the expiration of their initial subscription period. Our renewal rates may decline or fluctuate as a result of factors, including customer dissatisfaction with our service, customers’ ability to continue their operations and spending levels, consolidation, taking the process in-house, and deteriorating general economic conditions.
Our renewal rates may decline or fluctuate as a result of factors, including customer dissatisfaction with our service, customers’ ability to continue their operations and spending levels, consolidation, other competitive solutions, taking the process in-house, and deteriorating general economic conditions.
Our competitors may independently develop or patent technologies that are substantially equivalent or superior to ours. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.
Fields. Should we lose the services of Mr. Fields, our operations will be negatively impacted. Our business is dependent upon the expertise and continued service of our founder and Chief Executive Officer, Randall K. Fields. Mr. Fields is essential to our operations. Accordingly, an investor must rely on Mr. Fields’ management decisions that will continue to control our business affairs.
Our business is dependent upon the continued services of our founder and Chief Executive Officer, Randall K. Fields. Should we lose the services of Mr. Fields, our operations will be negatively impacted. Our business is dependent upon the expertise and continued service of our founder and Chief Executive Officer, Randall K. Fields. Mr. Fields is essential to our operations.
Our quarterly revenue and results of operations have varied in the past and may fluctuate as a result of a variety of factors. If our quarterly revenue or results of operations fluctuate, the price of our Common Stock could decline substantially.
Risks Relating to Our Common Stock Our quarterly results of operations may fluctuate in the future, which could result in volatility in the price of our Common Stock. Our quarterly revenue and results of operations have varied in the past and may fluctuate as a result of a variety of factors.
Period-to-period comparisons of operating results are not necessarily meaningful and should not be relied upon as an indicator of future performance. In addition, a large portion of our expense will be fixed in the short-term, particularly with respect to facilities and personnel making future operating results sensitive to fluctuations in revenue.
In addition, a large portion of our expense will be fixed in the short-term, particularly with respect to facilities and personnel making future operating results sensitive to fluctuations in revenue.
Moreover, many of our competitors are larger and have greater financial and operational resources than we do. This may allow them to offer better pricing terms to customers in the industry, which could result in a loss of potential or current customers or could force us to lower prices.
This may allow them to offer better pricing terms to customers in the industry, which could result in a loss of potential or current customers or could force us to lower prices.
Risk Relating to Business Operations Quarterly and annual operating results may fluctuate, which makes it difficult to predict future performance. Management expects a significant portion of our revenue stream to come from the sale of subscriptions and professional services charged to new customers. These amounts will fluctuate and are uncertain because predicting future sales is difficult and involves speculation.
Fields may have a materially adverse effect upon our business. Quarterly and annual operating results may fluctuate, which makes it difficult to predict future performance. Management expects a significant portion of our revenue stream to come from the sale of monthly subscriptions and professional services charged to new customers.
We currently maintain key man insurance on Mr. Fields’ life in the amount of $5,000,000; however, that coverage would be inadequate to compensate for the loss of his services. The loss of the services of Mr. Fields would have a materially adverse effect upon our business.
Accordingly, an investor must rely on Mr. Fields’ management decisions that will continue to control our business affairs. We currently maintain key man insurance on Mr. Fields’ life in the amount of $5,000,000; however, that coverage may not be adequate to compensate for the loss of his services. The loss of the services of Mr.
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Although our cash resources are currently sufficient, our long-term liquidity and capital requirements may be difficult to predict, which may adversely affect our long-term cash position.
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These amounts will fluctuate and are uncertain because predicting future sales is difficult and involves speculation.
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Historically, we have been successful in raising capital when necessary, including through private placements, a registered direct offering, and stock issuances to our officers and directors, including our Chief Executive Officer, to pay our indebtedness and fund our operations, in addition to cash flow from operations.
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Future operating results may fluctuate because of the foregoing factors, making it difficult to predict operating results. Period-to-period comparisons of operating results are not necessarily meaningful and should not be relied upon as an indicator of future performance.
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If we are required to seek additional financing in the future in order to fund our operations, retire our indebtedness and otherwise carry out our business plan, there can be no assurance that such financing will be available on acceptable terms, or at all, and there can be no assurance that any such arrangement, if required or otherwise sought, would be available on terms deemed to be commercially acceptable and in our best interests. -6- Our business is dependent upon the continued services of our founder and Chief Executive Officer, Randall K.
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We cannot accurately predict renewal or upgrade rates and the impact these rates may have on our future revenue and operating results. Our customers have no obligation to renew their subscriptions for our service after the expiration of their initial subscription period.
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In these instances, we assume the risks related to inventory. -9- Table of Contents We face risks associated with proprietary protection of our software. Our success depends on our ability to develop and protect existing and new proprietary technology and intellectual property rights.
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While we have attempted to safeguard and maintain our proprietary rights, there are no assurances that we will be successful in doing so. Our competitors may independently develop or patent technologies that are substantially equivalent or superior to ours.
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The secure processing, maintenance and transmission of this information is critical to our operations and business strategy, and we devote significant resources to protecting our information. The expenses associated with protecting our information could reduce our operating margins.
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If our quarterly revenue or results of operations fluctuate, the price of our Common Stock could decline substantially.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThere are no pending or threatened material legal proceedings at this time.
Biggest changeThere are no pending or threatened material legal proceedings at this time. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+2 added−0 removed2 unchanged
Biggest changeThe following table provides information about repurchases of our Common Stock registered pursuant to Section 12 of the Exchange Act, during the years ended June 30, 2022 and 2021: Period (1) Total Number of Shares Purchased by Period Average Price Paid Per Share Dollars Expended by Period Under the Plans or Programs Remaining Amount Available for Future Share Repurchases Under the Plans or Programs Pre-June 30, 2021 519,786 $ 5.27 $ 2,740,876 $ 1,259,123 Year Ended June 30, 2021: July 1, 2020 – September 30, 2020 - $ - - $ 1,259,123 October 1, 2020 – December 31, 2020 - $ - - $ 1,259,123 January 1, 2021 – March 31, 2021 84,081 $ 6.04 $ 508,243 $ 750,880 April 1, 2021 – June 30, 2021 126,927 $ 6.30 $ 799,996 $ 7,950,885 Year Ended June 30, 2022: July 1, 2021 – September 30, 2021 7,600 $ 5.43 $ 41,276 $ 7,909,609 October 1, 2021 – December 31, 2021 244,552 $ 5.85 $ 1,429,697 $ 6,479,912 January 1, 2022 – March 31, 2022 538,376 $ 6.95 $ 3,741,477 $ 2,738,435 April 1, 2022 – June 30, 2022 192,747 $ 4.78 $ 921,331 $ 10,817,104 (1) We close our books and records on the last calendar day of each month to align our financial closing with our business processes.
Biggest changeIn addition, the Share Repurchase Program may also be suspended for periods of time or discontinued at any time, at the Board’s discretion. 15 The following table provides information about repurchases of our Common Stock registered pursuant to Section 12 of the Exchange Act, during the years ended June 30, 2023 and 2022: Period (1) Total Number of Shares Purchased by Period Average Price Paid Per Share Dollars Expended by Period Under the Plans or Programs Remaining Amount Available for Future Share Repurchases Under the Plans or Programs Year Ended June 30, 2022: July 1, 2021 – September 30, 2021 7,600 $ 5.43 $ 41,276 $ 7,909,609 October 1, 2021 – December 31, 2021 244,552 $ 5.85 $ 1,429,697 $ 6,479,912 January 1, 2022 – March 31, 2022 538,376 $ 6.95 $ 3,741,477 $ 2,738,435 April 1, 2022 – June 30, 2022 192,747 $ 4.78 $ 921,331 $ 10,817,104 Year Ended June 30, 2023: July 1, 2022 – September 30, 2022 20,859 $ 4.97 $ 103,657 $ 10,713,447 October 1, 2022 – December 31, 2022 88,741 $ 5.05 $ 448,266 $ 10,265,181 January 1, 2023 – March 31, 2023 74,150 $ 5.79 $ 429,271 $ 9,835,910 April 1, 2023 – June 30, 2023 47,847 $ 6.86 $ 328,129 $ 9,507,781 (1) We close our books and records on the last calendar day of each month to align our financial closing with our business processes.
Share Repurchase Program On May 9, 2019, our Board of Directors approved of the repurchase of up to $4.0 million shares of our Common Stock, which repurchases may be made in privately negotiated transactions or in the open market at prices per share not exceeding the then-current market prices (the “ Share Repurchase Program ”).
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 may be made in privately negotiated transactions or in the open market at prices per share not 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 Rule 12b-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.
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 Rule 10b-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.
The number of holders of record and shares of Common Stock issued and outstanding was calculated by reference to the books and records of the Company’s transfer agent. Issuance of Securities We issued shares of our Common Stock in unregistered transactions during fiscal year 2022.
The number of holders of record and shares of Common Stock issued and outstanding was calculated by reference to the books and records of the Company’s transfer agent. Issuance of Securities We issued shares of our Common Stock in unregistered transactions during fiscal year 2023.
All of the shares of Common Stock issued in non-registered transactions were issued in reliance on Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”) and were reported in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K filed with the SEC during the fiscal year ended June 30, 2022. 7,808 shares of Common Stock were issued subsequent to June 30, 2022.
All of the shares of Common Stock issued in non-registered transactions were issued in reliance on Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”) and were reported in our Quarterly Reports on Form 10-Q and in our Current Reports on Form 8-K filed with the SEC during the fiscal year ended June 30, 2023. 16,430 shares of Common Stock were issued subsequent to June 30, 2023.
The following table sets forth the high and low sales prices of our Common Stock for the periods indicated: Quarterly Common Stock Price Ranges 2022 2021 Fiscal Quarter Ended High Low High Low September 30 $ 5.77 $ 4.81 $ 5.45 $ 3.72 December 31 $ 6.40 $ 4.90 $ 5.53 $ 3.80 March 31 $ 10.68 $ 5.12 $ 7.91 $ 4.75 June 30 $ 6.02 $ 4.06 $ 6.97 $ 4.80 Dividend Policy Outstanding shares of Series B Preferred and Series B-1 Preferred each accrue dividends at the rate per share of 7% per annum if paid by the Company in cash, and 9% per annum if paid by the Company in additional shares of Series B-1 Preferred.
The following table sets forth the high and low sales prices of our Common Stock for the periods indicated: Quarterly Common Stock Price Ranges 2023 2022 Fiscal Quarter Ended High Low High Low September 30 $ 6.60 $ 4.31 $ 5.77 $ 4.81 December 31 $ 5.64 $ 4.57 $ 6.40 $ 4.90 March 31 $ 6.60 $ 4.83 $ 10.68 $ 5.12 June 30 $ 10.50 $ 6.24 $ 6.02 $ 4.06 14 Dividends Outstanding shares of Series B Preferred and Series B-1 Preferred each accrue dividends at the rate per share of 7% per annum if paid by the Company in cash, and 9% per annum if paid by the Company in additional shares of Series B-1 Preferred.
Holders of Record At June 30, 2022, there were 635 holders of record of our Common Stock with 18,460,538 shares issued and outstanding, 3 holders of Series B Preferred with 625,375 shares issued and outstanding, and 4 holders of Series B-1 Preferred with 212,402 shares issued and outstanding.
Holders of Record At June 30, 2023, there were 628 holders of record of our Common Stock with 18,309,051 shares issued and outstanding, 3 holders of Series B Preferred with 625,375 shares issued and outstanding, and 4 holders of Series B-1 Preferred with 212,402 shares issued and outstanding.
On May 18, 2021, our Board of Directors resumed its Share Repurchase Program, and increased the buyback by another $4 million bringing the total authorized under the Share Repurchase Program to $8 million. -14- Table of Contents On August 31, 2021, our Board of Directors approved a further increase to its Share Repurchase program to $12 million in shares of our Common Stock which added an additional $4 million to 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 May 10, 2022, our Board of Directors approved an increase to its Share Repurchase Program with an additional $9 million in shares of our Common Stock. Since inception of the Share Repurchase Program, a total of $21,000,000 in shares of Common Stock have been approved under the Share Repurchase Program.
On August 31, 2021 our Board of Directors approved an increase of $4.0 million in the number of shares of Common Stock available to repurchase under the Share Repurchase Program, and 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, bringing the total number of Common Stock authorized to repurchase under the Share Repurchase Program as of June 30, 2023 to $21.0 million.
The total remaining authorization for future shares of Common Stock repurchases under our Share Repurchase Program was $10,817,104 as of June 30, 2022. From time-to-time, our Board of Directors may authorize further increases to our Share Repurchase Program. The Share Repurchase Program may be suspended for periods of time or discontinued at any time, at the Board’s discretion.
Since inception of the Share Repurchase Program through June 30, 2023, a total of 1,945,666 shares of Common Stock have been repurchased at an average purchase price of $5.91, resulting in $9,507,781 remaining available to repurchase under the current Share Repurchase Program. From time-to-time, our Board of Directors may authorize further increases to our Share Repurchase Program.
Dividends on the Series B Preferred and Series B-1 Preferred are payable quarterly. To date, the Company has not paid dividends on its Common Stock.
Dividends on the Series B Preferred and Series B-1 Preferred are payable quarterly. During the year ended June 30, 2023, the Company paid a quarterly cash dividend of $0.015 per share of Common Stock for each of the quarters ended September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023.
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We currently intend to continue to declare and pay a quarterly cash dividend on Common Stock equal to $0.015 per share ($0.06 per year) following our board of directors' periodic review of our financial condition and results of operations for each fiscal quarter.
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The dividend rate and the continued payment of dividends will depend upon our board of directors' consideration of a number of factors, including capital requirements, our financial condition and results of operations, statutory and regulatory limitations, tax considerations and general economic conditions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe 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 dividend announced on September 28, 2022, of $0.015 per share.
Biggest changeThe 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 and September 19, 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 ”).
Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenue and results of operation, liquidity or capital expenditures. -18- Table of Contents Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) (“ ASU 2016-02 ”).
Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenue and results of operation, liquidity or capital expenditures. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) (“ ASU 2016-02 ”).
The Company’s fiscal year ends on June 30. References to fiscal 2022 refer to the fiscal year ended June 30, 2022. Sources of Revenue The principal customers for the Company’s products are multi-store retail chains, wholesalers and distributors, and their suppliers.
The Company’s fiscal year ends on June 30. References to fiscal 2023 refer to the fiscal year ended June 30, 2023, and references to fiscal 2022 refer to the fiscal year ended June 30, 2022. 16 Sources of Revenue The principal customers for the Company’s products are multi-store retail chains, wholesalers and distributors, and their suppliers.
Preferred Dividends Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Preferred dividends $ 586,444 $ - - % $ 586,444 Percent of total revenue 3 % 3 % Dividends accrued on the Company’s Series B Preferred and Series B-1 Preferred was $586,444 and $586,444 for the years ended June 30, 2022 and 2021, respectively.
Preferred Dividends Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Preferred dividends $ 586,444 $ - - % $ 586,444 Percent of total revenue 3 % 3 % Dividends accrued on the Company’s Series B Preferred and Series B-1 Preferred was $586,444 and $586,444 for the years ended June 30, 2023 and 2022, respectively.
Premier customer support includes extended availability and additional services and is available along with additional support services such as developer support and partner support for an additional fee. -16- Table of Contents In some instances, the Company will sell its software in the form of a license. License arrangements are a time-specific and perpetual license.
Premier customer support includes extended availability and additional services and is available along with additional support services such as developer support and partner support for an additional fee. In some instances, the Company will sell its software in the form of a license. License arrangements are a time-specific and perpetual license.
Judgment is required in determining when technological feasibility of a product is established. We have determined that technological feasibility for our software products is reached shortly after a working prototype is complete and meets or exceeds design specifications including functions, features, and technical performance requirements.
We have determined that technological feasibility for our software products is reached shortly after a working prototype is complete and meets or exceeds design specifications including functions, features, and technical performance requirements.
During fiscal 2021, as COVID-19 disrupted supply chains and generated shortages in products, our ability to source hard to find items for our customers resulted in increased revenue attributable to MarketPlace. These products largely consisted of personal protective equipment used in connection with COVID-19 (“ PPE ”).
During fiscal 2022, as COVID-19 disrupted supply chains and generated shortages in products, our ability to source hard to find items for our customers resulted in increased revenue attributable to MarketPlace. These products largely consisted of personal protective equipment (“ PPE ”) which includes nitrile gloves, masks, freezers and telecommunication equipment.
Costs incurred after technological feasibility is established have been and will continue to be capitalized until such time as when the product or enhancement is available for general release to customers.
Costs incurred after technological feasibility is established have been and will continue to be capitalized until such time as when the product or enhancement is available for general release to customers. Available-for-Sale Debt Investments We classify our investments in fixed income securities as available-for-sale debt investments.
If these estimates and assumptions change in the future, the Company may record a reduction in the valuation allowance, resulting in an income tax benefit in the Company’s statements of operations.
If these estimates and assumptions change in the future, the Company may record a reduction in the valuation allowance, resulting in an income tax benefit in the Company’s statements of operations. Management evaluates quarterly whether to realize the deferred income tax assets and assesses the valuation allowance.
Management evaluates quarterly whether to realize the deferred income tax assets and assesses the valuation allowance. -17- Table of Contents Goodwill and Other Long-Lived Asset Valuations Goodwill is assigned to specific reporting units and is reviewed for possible impairment at least annually or upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.
Goodwill and Other Long-Lived Asset Valuations Goodwill is assigned to specific reporting units and is reviewed for possible impairment at least annually or upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.
General and Administrative Expense Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 General and administrative $ 4,716,131 $ (498,805 ) -10 % $ 5,214,936 Percent of total revenue 26 % 25 % The Company’s general and administrative expense was $4,716,131, or 26% of total revenue, and $5,214,936 or 25% of total revenue for the years ended June 30, 2022 and 2021, respectively, a decrease of 10%.
General and Administrative Expense Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 General and administrative $ 4,685,783 $ (30,348 ) -1 % $ 4,716,131 Percent of total revenue 25 % 26 % The Company’s general and administrative expense was $4,685,783, or 25% of total revenue, and $4,716,131 or 26% of total revenue for the years ended June 30, 2023 and 2022, respectively, a decrease of 1%.
The Company believes it will have adequate cash resources to fund its operations, satisfy its debt obligations, and fund its anticipated quarterly cash dividend for at least the next 12 months.
The Preferred Redemption is to occur over the next three years from September 12, 2023. 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.
Our management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. These measures are also presented to our Board of Directors.
We believe that these non-GAAP measures may provide useful information regarding certain financial and business trends relating to our financial condition and operations. Our management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. These measures are also presented to our Board of Directors.
Other Income and Expense Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Net other income and (expense) $ (281,558 ) $ (1,583,450 ) -122 % $ 1,301,892 Percent of total revenue 2 % 6 % Net other expense was $281,558 compared to net other income of $1,301,892 for the years ended June 30, 2022 and 2021, respectively.
Other Income and Expense Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Net other income and (expense) $ 821,082 $ 1,102,640 392 % $ (281,558 ) Percent of total revenue 4 % 2 % Net other income was $821,082 compared to net other expense of $281,558 for the years ended June 30, 2023 and 2022, respectively.
Net Cash Flows Used in Investing Activities Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Cash provided by (used in) investing activities $ 1,323,262 $ 1,642,135 515 % $ (318,873 ) Net cash provided by investing activities for the year ended June 30, 2022 was $1,323,262 compared to net cash used in investing activities of $318,873 for the year ended June 30, 2021.
Net Cash Flows Used in Investing Activities Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Cash provided by (used in) investing activities $ (903,187 ) $ 2,226,449 168 % $ 1,323,262 Net cash used in investing activities for the year ended June 30, 2023 was $903,187 compared to net cash provided by investing activities of $1,323,262 for the year ended June 30, 2022.
Among other things, the Company must maintain liquid assets equal to the outstanding balance of the Note and maintain a Senior Funded Debt (as defined in the Credit Agreement) to EBITDA Ratio (as defined in the Credit Agreement) of not more than 3:1.
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) of not more than 3:1.
We adopted ASU 2014-09 using a “modified retrospective” approach and, accordingly, revenue and expense totals for all periods before July 1, 2018 reflect those previously reported under the prior accounting model and have not been restated.
We adopted ASU 2014-09 using a “modified retrospective” approach and, accordingly, revenue and expense totals for all periods before July 1, 2018 reflect those previously reported under the prior accounting model and have not been restated. 17 Other Metrics – Non-GAAP Financial Measures To supplement our financial statements, historically we have provided investors with Adjusted EBITDA and non-GAAP income per share, both of which are non-GAAP financial measures.
Net Cash Flows from Financing Activities Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Cash used in financing activities $ (10,034,253 ) $ 8,676,303 639 % $ (1,357,950 ) Net cash used in financing activities totaled $10,034,253 for the year ended June 30, 2022 compared to net cash used in financing activities of $1,357,950 for the year ended June 30, 2021.
Net Cash Flows from Financing Activities Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Cash used in financing activities $ (5,426,901 ) $ (4,607,352 ) -46 % $ (10,034,253 ) Net cash used in financing activities totaled $5,426,901 for the year ended June 30, 2023 compared to net cash used in financing activities of $10,034,253 for the year ended June 30, 2022.
The fair value of any 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.
The fair value of any 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. 18 Capitalization of 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.
Contractual Obligations Total contractual obligations and commercial commitments as of June 30, 2022 are summarized in the following table: Payment Due by Year Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Operating lease obligations $ 375,680 $ 53,862 $ 122,846 $ 145,322 $ 53,650 Inflation The impact of inflation has historically not had a material effect on the Company’s financial condition or results from operations; however, higher rates of inflation may cause retailers to slow their spending in the technology area, which could have an impact on the Company’s sales. -23- Table of Contents
Contractual Obligations Total contractual obligations and commercial commitments as of June 30, 2023 are summarized in the following table: Operating Leases Financing Leases Less than 1Year $ 73,291 $ 234,117 1-3 Years 153,245 210,345 3-5 Years 134,536 - Total lease payments 361,072 444,462 Less imputed interest (39,254 ) (19,168 ) Total $ 321,818 $ 425,294 23 Inflation The impact of inflation has historically not had a material effect on the Company’s financial condition or results from operations; however, higher rates of inflation may cause retailers to slow their spending in the technology area, which could have an impact on the Company’s sales.
Sales and Marketing Expense Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Sales and marketing $ 4,853,926 $ (141,652 ) -3 % $ 4,995,578 Percent of total revenue 27 % 24 % The Company’s sales and marketing expense was $4,853,926, or 27% of total revenue, and $4,995,578, or 24% of total revenue, for the fiscal years ended June 30, 2022 and 2021, respectively, a decrease of 3%.
Sales and Marketing Expense Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Sales and marketing $ 4,933,405 $ 79,479 2 % $ 4,853,926 Percent of total revenue 26 % 27 % The Company’s sales and marketing expense was $4,933,405, or 26% of total revenue, as compared to $4,853,926, or 27% of total revenue, for the fiscal years ended June 30, 2023 and 2022, respectively, an increase of 2%.
Results of Operations – Fiscal Years Ended June 30, 2022 and 2021 Revenue Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Revenue $ 18,046,941 $ (2,960,135 ) -14 % $ 21,007,076 During the fiscal year ended June 30, 2022, the Company had revenue of $18,046,941 as compared to $21,007,076 for the year ended June 30, 2021, a decrease of 14%.
Results of Operations – Fiscal Years Ended June 30, 2023 and 2022 Revenue Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Revenue $ 19,098,910 $ 1,051,969 6 % $ 18,046,941 During the fiscal year ended June 30, 2023, the Company had revenue of $19,098,910 as compared to $18,046,941 for the year ended June 30, 2022, an increase of 6%.
This increase in cash provided by investing activities for the fiscal year was due to the sale of property and equipment.
This increase in cash used in investing activities for the year ended June 30, 2023 was due to the sale of property and equipment in prior fiscal year and the capitalization of software costs incurred in development of the ReposiTrak Traceability Network® (“ RTN ”).
The comparative decrease in current liabilities is primarily attributable to the corresponding payoff of $6.0 million in our line of credit, as discussed below. On October 6, 2021, the Company and the Bank executed the Credit Agreement, with an effective date of September 30, 2021.
The decrease in current liabilities is primarily attributable to the corresponding payoff of $2.6 million in our line of credit. As of June 30, 2023, the Company has zero bank debt.
While we don’t currently anticipate that such uncertainties will materially affect our future results from operations, no assurances can be given. -19- Table of Contents 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.
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, including MarketPlace 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).
The decrease in current assets is primarily attributable to a net decrease in cash of $2,609,374 from paying off a credit arrangement, an increase in contract assets and prepaid expense of $216,808 and a decrease in accounts receivable of $726,499.
The increase in current assets is primarily attributable to a net increase in cash and cash equivalents offset with a decrease in contract assets and prepaid expense of $1,195,839 and a decrease in accounts receivable of $642,181.
As of June 30, As of June 30, Variance 2022 2021 Dollars Percent Current assets $ 26,582,709 $ 29,701,774 $ (3,119,065 ) -11 % Current assets as of June 30, 2022 totaled $26,582,709, a decrease of $3,119,065, as compared to $29,701,774 as of June 30, 2021.
As of June 30, As of June 30, Variance 2023 2022 Dollars Percent Current assets $ 27,274,620 $ 26,582,709 $ 691,911 3 % 22 Current assets as of June 30, 2023 totaled $27,274,620, an increase of $691,911, as compared to $26,582,709 as of June 30, 2022.
Capitalization of 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, all software costs are capitalized until the product is available for general release to customers.
Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established.
This 11% decrease is principally the result of a $6.0 million payoff of financing arrangements with a bank, cash used for the Share Repurchase Program, partially offset by lower overall cash operating expense and collections on accounts receivable. -21- Table of Contents Net Cash Flows from Operating Activities Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Cash provided by operating activities $ 6,101,617 $ 699,802 13 % $ 5,401,815 Net cash provided by operating activities is summarized as follows: Year Ended June 30, 2022 Year Ended June 30, 2021 Net income $ 4,003,095 $ 4,117,395 Noncash expense and income, net 2,329,260 1,388,831 Net changes in operating assets and liabilities (230,738 ) (104,411 ) $ 6,101,617 $ 5,401,815 Net cash provided by operating activities for the year ended June 30, 2022 was $6,101,617 compared to net cash provided by operating activities of $5,401,815 for the year ended June 30, 2021.
Net Cash Flows from Operating Activities Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Cash provided by operating activities $ 8,860,019 $ 2,758,402 45 % $ 6,101,617 21 Net cash provided by operating activities is summarized as follows: Year Ended June 30, 2023 Year Ended June 30, 2022 Net income $ 5,590,289 $ 4,003,095 Noncash expense and income, net 2,828,231 2,329,260 Net changes in operating assets and liabilities 441,499 (230,738 ) $ 8,860,019 $ 6,101,617 Net cash provided by operating activities for the year ended June 30, 2023 was $8,860,019 compared to net cash provided by operating activities of $6,101,617 for the year ended June 30, 2022.
The increase in net cash used in financing activities is primarily attributable to our line of credit arrangement with a bank and purchase of stock under the Share Repurchase Program. -22- Table of Contents Liquidity and Working Capital At June 30, 2022, the Company had positive working capital of $20,485,875, as compared with positive working capital of $20,400,991 at June 30, 2021.
Liquidity and Working Capital At June 30, 2023, the Company had positive working capital of $23,042,199, as compared with positive working capital of $20,485,875 at June 30, 2022. This $2,556,324 increase in working capital is primarily due to a decrease in liability as a result of the payoff of a financing arrangement with a bank.
Given rising interest rates, the Company recognized a decline in its bond portfolio and other fixed income instruments on excess cash.
Although rising interest rates provided additional interest income, the Company recognized a decline in its bond portfolio and other fixed income instruments on excess cash. The Company has zero bank debt. However, the Company does recognize interest expense associated with employee credit cards and financing arrangements due to leases or other payment arrangements.
This $84,884 increase in working capital is primarily due to a decrease in cash as a result of the $6.0 million payoff of a financing arrangement with a bank and purchase of stock under the Share Repurchase Program.
The decrease in net cash used in financing activities is primarily attributable to the $2.6 million payoff of our line of credit arrangement with a bank in prior fiscal year and the purchase of stock under the Share Repurchase Program. This was partially offset with the quarterly payment of cash dividends on common stock declared in prior fiscal year.
Cost of Services and Product Support Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Cost of service and product support $ 3,186,712 $ (3,697,935 ) -54 % $ 6,884,647 Percent of total revenue 18 % 33 % Cost of services and product support was $3,186,712 or 18% of total revenue, and $6,884,647 or 33% of total revenue for the years ended June 30, 2022 and 2021, respectively, a decrease of 54%.
We will continue to make our best effort to reduce this non-recurring transactional revenue when we are able. 19 Cost of Services and Product Support Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Cost of service and product support $ 3,309,345 $ 122,633 4 % $ 3,186,712 Percent of total revenue 17 % 18 % Cost of services and product support was $3,309,345 or 17% of total revenue, and $3,186,712 or 18% of total revenue for the years ended June 30, 2023 and 2022, respectively, an increase of 4%.
Noncash expense increased by $940,429 in the year ended June 30, 2022 compared to the year ended June 30, 2021 as a result of loss on sale of property and equipment, a modification of an operating lease resulting in a decrease of a right-of-use asset and an increase in stock compensation expense.
Noncash expense increased by $498,971 for the year ended June 30, 2023 compared to the year ended June 30, 2022 as a result of increased depreciation and amortization of certain assets and an increase in bad debt expense.
Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Cash and Cash Equivalents $ 21,460,948 $ (2,609,374 ) -11 % $ 24,070,322 We have historically funded our operations with cash from operations, equity financings, and borrowings from the issuance of debt, including our Credit Agreement with U.S.
As of Variance June 30, 2023 June 30, 2022 Dollars Percent Cash and cash equivalents $ 23,990,879 $ 21,460,948 $ 2,529,931 12 % 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., which was revised on October 6, 2021 and again in 2022.
The change in other income (expense) was due to (1) recognition of a gain on debt extinguishment for the Company’s PPP loan in fiscal 2021 that did not occur in fiscal 2022; (2) an increase in interest expense associated with financing arrangements with a bank for the Company’s stock repurchase plan; and (3) realized losses of certain short-term investments held in U.S. treasuries and other securities.
Other income increased due to (1) an increase in interest income due to rising interest rates on fixed income instruments on excess cash; and (2) offset by realized losses of certain short-term investments held in U.S. treasuries and other securities that occurred in prior fiscal year.
As of June 30, As of June 30, Variance 2022 2021 Dollars Percent Current liabilities $ 6,096,834 $ 9,300,783 $ (3,203,949 ) -34 % Current liabilities totaled $6,096,834 as of June 30, 2022 as compared to $9,300,783 as of June 30, 2021.
As of June 30, As of June 30, Variance 2023 2022 Change Percent Current liabilities $ 4,232,421 $ 6,096,834 $ (1,864,413 ) -31 % Current Ratio 6.44 4.36 2.08 48 % Current liabilities totaled $4,232,421 as of June 30, 2023 as compared to $6,096,834 as of June 30, 2022.
While the Company experienced a significant increase in MarketPlace revenue for PPE during the height of COVID-19, that demand significantly decreased in 2022, and future demand is uncertain. The uncertainty regarding future demand for MarketPlace is heightened due to recent geopolitical conflicts, including the current war in Ukraine.
While the Company experienced a significant increase in MarketPlace revenue for PPE during the height of COVID-19, it is uncertain what or if any demand for PPE will continue in fiscal 2024. As a result, we may experience significant swings in MarketPlace revenue as the pandemic continues to abate.
The decrease in general and administrative expense is primarily due to the termination of hosted software applications including its CRM provider, employee expense management software, and a decrease in maintenance costs associated with certain fixed assets. -20- Table of Contents Depreciation and Amortization Expense Year Ended June 30, 2022 $ Change % Change Year Ended June 30, 2021 Depreciation and amortization $ 875,551 $ (143,964 ) -14 % $ 1,019,515 Percent of total revenue 5 % 5 % The Company’s depreciation and amortization expense was $875,551 and $1,019,515 for the years ended June 30, 2022 and 2021, respectively, a decrease of 14%.
Depreciation and Amortization Expense Year Ended June 30, 2023 $ Change % Change Year Ended June 30, 2022 Depreciation and amortization $ 1,079,799 $ 204,248 23 % $ 875,551 Percent of total revenue 6 % 5 % 20 The Company’s depreciation and amortization expense was $1,079,799 and $875,551 for the years ended June 30, 2023 and 2022, respectively, an increase of 23%.
Removed
Other Metrics – Non-GAAP Financial Measures To supplement our financial statements, historically we have provided investors with Adjusted EBITDA and non-GAAP income per share, both of which are non-GAAP financial measures. We believe that these non-GAAP measures may provide useful information regarding certain financial and business trends relating to our financial condition and operations.
Added
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.
Removed
The decrease in revenue was due to significant MarketPlace revenue contribution during the height of COVID-19 that occurred in fiscal 2021 that did not reoccur in 2022. Given its volatility and non-recurring nature, the Company’s strategic plan is to eliminate all non-core non-recurring revenue.
Added
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.
Removed
Year to date, this includes approximately $3,600,000, in non- recurring Marketplace revenue, and $600,000 in recurring revenue for products and services that had little upside and very low margin. This was partially offset by revenue growth in compliance subscription, supply chain services and other recurring revenue.
Added
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.
Removed
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.
Added
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.
Removed
This decrease is the result of planned elimination of low margin products, services and ongoing cost control. We eliminated high cost, low margin MarketPlace transactional revenue which significantly reduced procurement costs. With lower MarketPlace transactions, we realized significantly less Cost of Services.
Added
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 ”).
Removed
In addition, we sunsetted two vendor managed pricing products and the associated headcount which also contributed to lower Cost of Services. We also eliminated certain 3rd party vendor software services which contributed to the reduction.
Added
The increase in revenue during the period was due to revenue growth in subscription, services and other recurring revenue in all areas of the business, particularly compliance and supply chain. This is the result of growing industry and consumer concern of food contaminations and food safety hazards whether biological, chemical, physical, or allergenic.
Removed
While we experienced a significant increase in MarketPlace costs and corresponding revenue during fiscal 2021 due to demand in PPE, those costs and corresponding revenue were not continued in fiscal 2022. It is uncertain what Marketplace transactional revenue, if any, we can expect going forward since the Company has chosen to eliminate all non-core non-recurring revenue.
Added
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 rising demand for its services.
Removed
This was due primarily to a decrease in variable compensation, a reduction in trade show expense, and lower sales and marketing travel expense.
Added
This increase is primarily the result of (1) increased salary and IT support and maintenance costs. Given the rise in cyber-attacks around the globe, we continue to expand our cyber security infrastructure which includes expenditures on; (1) identification (2) protection (3) detection (4) response, and, (5) recovery.
Removed
This decrease is due to the disposal of certain assets in the current fiscal year.
Added
We increased spending by $72,112 in the areas of detection, response and recovery during the period.
Removed
Bank N.A., which was revised on October 6, 2021 (See Note 8 Notes to Consolidated Financial Statements contained within this Annual Report). Cash was $21,460,948 and $24,070,322 at June 30, 2022 and 2021, respectively.
Added
This increase in sales and marketing expense is primarily due to 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.
Removed
Net cash provided by operating activities increased 13% due largely to elimination of low margin products, services, and overall cost control.
Added
The largest contributor to the increase in sales and marketing expense has been an increase in travel cost and trade shows.
Removed
Additionally, a gain on debt extinguishment occurred in the year ended June 30, 2021 that did not recur in the year ended June 30, 2022.
Added
We believe this trend will continue as many of our trading partners, industry associations will continue to require our assistance in addressing their compliance and supply chain needs “in-person.” Given the complexity of FSMA 204 requirements, our customers require additional assistance in evaluating their locations for onboarding.
Removed
Any amounts drawn down by the Company under the Credit Agreement accrue interest at an annual rate equal to 1.75% plus the one-month LIBOR rate. In addition, the Credit Agreement contains customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default.
Added
In many cases, this requires multiple onsite meetings with distribution centers, warehouse operations, and store locations.
Added
The decrease in general and administrative expense is primarily due to a refund of payroll taxes associated with the Employee Retention Credit (“ ERC ”). The ERC is a refund or certain payroll taxes for businesses that continued to pay employees while shut down temporarily due to the COVID-19 pandemic or had significant declines in gross receipts.
Added
During fiscal 2023, the Company received approximately $1.175 million in payroll tax refunds, net of fees. The ERC refund was offset by increases in bad debt expense, increase costs of benefits for employees, and higher payroll costs due to a tight labor market.
Added
This increase is due to additional assets acquired in fiscal year 2023. As previously stated in Cost of Services and Product Support, we expend resources on both services and technology infrastructure. Historically, we spend between $250-$500k per annum on updating our hardware and cybersecurity infrastructure.
Added
During the period, we expended an additional $327,323 on hardware and software for both our Murray, UT datacenter and our Las Vegas data center to further provide redundancy and bolster our technology infrastructure to defend against cyber-attacks.
Added
Cash was $23,990,879 and $21,460,948 at June 30, 2023 and 2022, respectively.
Added
This 12% increase is principally the result of (1) sales growth, (2) collections of accounts receivable, (3) offset by paying down over $2.6 million of our existing line of credit, and (3) the purchase of common stock under our existing buyback plan, and (4) payment of dividends on both the preferred stock and common stock.
Added
Cash was also impacted by lower overall cash operating expense, receiving cash in advance on subscriptions, and the previously disclosed $1.1 million received in conjunction with the ERC.
Added
Net cash provided by operating activities increased 45% due largely to (1) higher revenue and collection of monthly subscription fees paid annually in advance, (2) collection of outstanding receivables, (3) an increase in prepaids and other assets and (3) an increase in deferred revenue offset by a decrease in accounts payable.
Added
Cash and cash equivalents also increased due to higher sales, cash-in-advance customers, higher rate of return on excess capital and the receipt of the previously disclosed $1.1 million in conjunction of the ERC.
Added
On October 6, 2021, the Company and the Bank executed the Credit Agreement, with an effective date of September 30, 2021 which is amended annually to reflect the needs of the Company.
Added
On April 28, 2023, the Company and the Bank executed an Amendment to the existing $10.0 million Credit Agreement, with an effective date of March 31, 2023. The new amendment provisions to the existing $10 million facility are (1) the Company will increase its liquidity requirement from $10 million to $12 million.
Added
Currently the Company maintains over $22 million in cash and a current ratio of over 6:1. (2) Draws on the facility accrue interest at the annual rate equal to 1.75% plus the one-month SOFR rate instead of the previous LIBOR rate. As of June 30, 2023, the balance of the facility was zero. The Company has zero bank debt.

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