What changed in ReposiTrak, Inc.'s 10-K — 2023 vs 2024
vs
Paragraph-level year-over-year comparison of ReposiTrak, Inc.'s 2023 and 2024 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 2024 report.
+108 added−187 removedSource: 10-K (2024-09-30) vs 10-K (2023-09-28)
Top changes in ReposiTrak, Inc.'s 2024 10-K
108 paragraphs added · 187 removed · 85 edited across 5 sections
- Item 4. Mine Safety Disclosures+2 / −80 · 2 edited
- Item 7. Management's Discussion & Analysis+56 / −62 · 41 edited
- Item 1A. Risk Factors+36 / −33 · 31 edited
- Item 5. Market for Registrant's Common Equity+13 / −11 · 10 edited
- Item 2. Properties+1 / −1 · 1 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
31 edited+5 added−2 removed66 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
31 edited+5 added−2 removed66 unchanged
2023 filing
2024 filing
Biggest changeThe shares of our Common Stock may be substantially diluted due to the following: ● issuance of Common Stock in connection with funding agreements with third parties and future issuances of Common Stock and the Company’s Preferred Stock, par value $0.01 (“ Preferred Stock ”) by the Board of Directors; and ● the Board of Directors has the power to issue additional shares of Common Stock and Preferred Stock and the right to determine the voting, dividend, conversion, liquidation, preferences and other conditions of the shares without shareholder approval.
Biggest changeThe shares of our Common Stock may be substantially diluted due to the issuance of Common Stock in connection with funding agreements with third parties and future issuances of Common Stock and the Company’s Preferred Stock, par value $0.01 (“Preferred Stock”) .
If our customers do not renew their subscriptions for our service or reduce the level of service at the time of renewal, our revenue will decline, and our business will suffer. Our future success also depends in part on our ability to increase rates, sell additional features and services, or sell additional subscriptions to our current customers.
If our customers do not renew their subscriptions for our services or reduce the level of service at the time of renewal, our revenue will decline, and our business will suffer. Our future success also depends in part on our ability to increase rates, sell additional features and services, or sell additional subscriptions to our current customers.
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.
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 recommended 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.
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.
We also depend on our partners to ensure proper labeling of products. Issues or concerns regarding product safety, labeling, 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.
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.
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; 6 Table of Contents ● 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 expense 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 expense 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.
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.
The loss of the services of Mr. 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.
Fields, our Chief Executive Officer, controls 37% of our Common Stock. Consequently, Mr. Fields, individually, and our officers and directors, as stockholders acting together, can significantly influence all matters requiring approval by our stockholders, including the election of directors and significant corporate transactions, such as mergers or other business combination transactions.
Fields, our Chief Executive Officer, controls 34% of our Common Stock. Consequently, Mr. Fields, individually, and our officers and directors, as stockholders acting together, can significantly influence all matters requiring approval by our stockholders, including the election of directors and significant corporate transactions, such as mergers or other business combination transactions.
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 renewal rates may decline or fluctuate as a result of factors, including customer dissatisfaction with our services, customers’ ability to continue their operations and spending levels, consolidation, other competitive solutions, taking the process in-house, and deteriorating general economic conditions.
In the event (i) FSMA 204 is postponed or delayed, (ii) modified to the extent of applicability of the rules of FSMA 204 to various food industry sectors, (iii) the penalties for violations of FSMA 204 are reduced or eliminated, or (iv) delay or failure by the industry to adopt practices in compliance with FSMA 204, in each case, could slow the adoption of our technology as a compliance tool for FSMA 204, which could have a material adverse effect on our business, results of operations, and financial condition.
In the event (i) FSMA 204 is modified to the extent of applicability of the rules of FSMA 204 to various food industry sectors, (ii) the penalties for violations of FSMA 204 are reduced or eliminated, or (iii) delay or failure by the industry to adopt practices in compliance with FSMA 204, in each case, could slow the adoption of our technology as a compliance tool for FSMA 204, which could have a material adverse effect on our business, results of operations, and financial condition.
Further, any new issuance of Common Stock or Preferred Stock may prevent a change in control or management. Our officers and directors have significant control over us, which may lead to conflicts with other stockholders over corporate governance. Our officers and directors control approximately 46% of our Common Stock. Randall K.
Further, any new issuance of Common Stock or Preferred Stock may prevent a change in control or management. Our officers and directors have significant control over us, which may lead to conflicts with other stockholders over corporate governance. Our officers and directors control approximately 45% of our Common Stock. Randall K.
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.
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 services after the expiration of their initial subscription period.
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.
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. 10 Table of Contents 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.
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 expenses will be fixed in the short-term, particularly with respect to facilities and personnel making future operating results sensitive to fluctuations in revenue.
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.
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. 7 Table of Contents Moreover, many of our competitors are larger and have greater financial and operational resources than we do.
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.
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. 9 Table of Contents Interruptions or delays in service from our third-party data center hosting facility could impair the delivery of our service and harm our business.
The United States and other key international economies have experienced in the past a downturn in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty with respect to the economy.
The U.S. and other key international economies have experienced in the past a downturn in which economic activity was impacted by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty with respect to the economy.
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.
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. 8 Table of Contents 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. 12 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. 11 Table of Contents The limited public market for our Common Stock may adversely affect an investor ’ s ability to liquidate an investment in us.
We currently serve our customers from a third-party data center hosting facility located in the United States. Any damage to, or failure of, our systems generally could result in interruptions in our service. As we continue to add capacity, we may move or transfer our data and our customers’ data.
We currently serve our customers from a third-party data center hosting facility located in the U.S. Any damage to, or failure of, our systems generally could result in interruptions in our service. As we continue to add capacity, we may move or transfer our data and our customers’ data.
While we are unable to determine the extent to which piracy of our software exists, software piracy can be expected to be a persistent problem, particularly in foreign countries where the laws may not protect proprietary rights as fully as the United States.
While we are unable to determine the extent to which piracy of our software exists, software piracy can be expected to be a persistent problem, particularly in foreign countries where the laws may not protect proprietary rights as fully as the U.S.
As part of our current disaster recovery arrangements, our production environment and all of our customers’ data is currently replicated in near real-time in a separate facility physically located in a different region of the United States.
As part of our current disaster recovery arrangements, our production environment and all of our customers’ data is currently replicated in near real-time in a separate facility physically located in a different region of the U.S.
Geopolitical conflicts could potentially affect our sales and disrupt our operations and could have a material adverse impact on the Company. Geopolitical conflicts, including the recent war in Ukraine, could adversely impact our operations or those of our customers.
Geopolitical conflicts could potentially affect our sales and disrupt our operations and could have a material adverse impact on the Company. Geopolitical conflicts, including the recent wars in Ukraine and the Middle East, could adversely impact our operations or those of our customers.
Although our Common Stock is currently quoted on the NASDAQ Capital Market, there is limited trading activity. We can give no assurance that an active market will develop, or if developed, that it will be sustained.
Although our Common Stock is currently quoted on the New York Stock Exchange, there is limited trading activity. We can give no assurance that an active market will develop, or if developed, that it will be sustained.
The Company’s general business strategy may be adversely affected by any such inflationary fluctuations, economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions.
While the CPI has come off its March 2022 highs, the Company’s general business strategy may be adversely affected by any such inflationary fluctuations, economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions.
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.
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.
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.
The expense associated with protecting our information could reduce our operating margins. A delay in the deadline for compliance with FSMA 204 may slow the adoption of our technology as a compliance tool for FMSA, therefore negatively affecting our revenue.
We cannot provide assurance that we will continue to generate revenue or have sustainable profits. If we do not operate profitably in the future, our current cash resources will be used to fund our operating losses. Continued losses would have an adverse effect on the long-term value of our Common Stock and any investment in the Company.
If we do not operate profitably in the future, our current cash resources will be used to fund our operating losses. Continued losses would have an adverse effect on the long-term value of our Common Stock and any investment in the Company. Our business is dependent upon the continued services of our founder and Chief Executive Officer, Randall K. Fields.
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.
As of June 30, 2024, a total of 616,470 shares of Series B Preferred and 0 shares of Series B-1 Preferred were issued and outstanding.
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.
Therefore, there can be no assurance that quarterly dividends will continue to be paid on our Common Stock. 12 Table of Contents Our officers and directors have limited liability and indemnification rights under our organizational documents, which may impact our results. Our officers and directors are required to exercise good faith and high integrity in the management of our affairs.
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.
Although we generated a year over year increase in net income in the year ended June 30, 2024, there can be no assurance that we will continue to increase net income and/or achieve profitability in future periods. We cannot provide assurance that we will continue to generate revenue or have sustainable profits.
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.
Failure or delay by our customers in the implementation of Section 204(d) of the FSMA may slow the adoption of our technology as a compliance tool for FMSA 204. In September 2020, the FDA proposed FSMA 204, which was published in November 2022 and went into effect in January 2023.
Removed
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.
Added
We had net income of $5,958,290 for the year ended June 30, 2024, compared to a net income of $5,590,289 for the year ended June 30, 2023.
Removed
Our officers and directors are required to exercise good faith and high integrity in the management of our affairs.
Added
Section 204(d) of the FMSA (“ FSMA 204 ”) went into effect in January 2023, and the deadline for compliance is January 20, 2026.
Added
In the event the FDA delays the deadline for compliance, and the industry or our customers likewise delay the rate of information technology spending in response, our customers’ ability or willingness to purchase our enterprise cloud computing services could adversely affect our operating results, and such affect may be material.
Added
FSMA 204 will apply to all foods on the FDA’s Food Traceability List.
Added
Future dividends may also be affected by covenants contained in loan or other financing documents, which we may execute in the future.
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
Biggest changeITEM 2. PROPERTIES Our principal place of business operations is located at 5282 South Commerce Drive, Suite D292, Murray, Utah 84107. We lease approximately 5,000 square feet at this corporate office location, consisting primarily of office space, conference rooms and storage areas. Our telephone number is (435) 645-2000. Our website address is http://www.parkcitygroup.com .
Biggest changeITEM 2. PROPERTIES Our principal place of business operations is located at 5282 South Commerce Drive, Suite D292, Murray, Utah 84107. We lease approximately 5,000 square feet at this corporate office location, consisting primarily of office space, conference rooms and storage areas. Our telephone number is (435) 645-2000. Our website address is http://www.repositrak.com .
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
2 edited+0 added−78 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
2 edited+0 added−78 removed0 unchanged
2023 filing
2024 filing
Biggest changeFinancial Statements and Supplementary Data 24 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 Item 9A. Controls and Procedures 24 Item 9B. Other Information 25 PART III Item 10. Directors, Executive Officers and Corporate Governance 25 Item 11. Executive Compensation 25 Item 12.
Biggest changeFinancial Statements and Supplementary Data 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 23 Item 9A. Controls and Procedures 23
Item 4. Mine Safety Disclosures 14 PART II Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14 Item 6. Selected Financial Data 16 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 24 Item 8.
Item 4. Mine Safety Disclosures 13 PART II Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 13 Item 6. Selected Financial Data 15 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 23 Item 8.
Removed
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 25 Item 13. Certain Relationships and Related Transactions, and Director Independence 25 Item 14. Principal Accounting Fees and Services 25 PART IV Item 15.
Removed
Exhibits, Financial Statement Schedules 25 Signatures 28 Report of Independent Registered Public Accounting Firm F-1 Consolidated Balance Sheets as of June 30, 2023 and 2022 F-3 Consolidated Statements of Operations for the Years Ended June 30, 2023 and 2022 F-4 Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended June 30, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the Years Ended June 30, 2023 and 2022 F-6 Notes to Consolidated Financial Statements F-7 Exhibit 31 Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Removed
Exhibit 32 Certifications pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “ Annual Report ” ) contains forward-looking statements.
Removed
The words or phrases “ would be, ” “ will allow, ” “ intends to, ” “ will likely result, ” “ are expected to, ” “ will continue, ” “ is anticipated, ” “ estimate, ” “ project, ” or similar expressions are intended to identify “ forward-looking statements. ” Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties, including the risk factors set forth below and elsewhere in this Annual Report.
Removed
See “ Risk Factors ” and “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. ” Statements made herein are as of the date of the filing of this Annual Report with the Securities and Exchange Commission and should not be relied upon as of any subsequent date.
Removed
Unless otherwise required by applicable law, we do not undertake, and specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. 1 PART I ITEM I.
Removed
BUSINESS Overview Park City Group, Inc., a Nevada corporation (“ Park City Group ”, “ We ”, “ us ”, “ our ” or the “ Company ”) is a Software-as-a-Service (“ SaaS ”) provider, and the parent company of ReposiTrak, Inc., a Utah corporation (“ ReposiTrak ”) which operates a business-to-business (“ B2B ”) e-commerce, compliance, and supply chain management platform that partners with retailers, wholesalers, and product suppliers to help them source, vet, and transact with their suppliers in order to accelerate sales, control risks, and improve supply chain efficiencies, and source hard-to-get-things.
Removed
The Company’s services are grouped in three application suites: (i) ReposiTrak MarketPlace (“ MarketPlace ”), encompassing the Company’s supplier discovery and B2B e-commerce solutions, which helps the Company’s customers find new suppliers; (ii) ReposiTrak Compliance and Food Safety (“ Compliance and Food Safety ”) solutions, which help the Company’s customers vet suppliers to mitigate the risk of doing business with these suppliers; and (iii) ReposiTrak’s Supply Chain (“ Supply Chain ”) solutions, which help the Company’s customers to more efficiently manage their various transactions with their suppliers.
Removed
The Company’s Supply Chain and MarketPlace services provide its customers with greater flexibility in sourcing products by enabling them to choose new suppliers and integrate them into their supply chain faster and more cost effectively, and it helps them to manage these relationships more efficiently, enhancing revenue while lowering working capital, labor costs and waste.
Removed
The Company’s Compliance and Food Safety solutions help reduce a company’s potential regulatory, legal, and criminal risk from its supply chain partners by providing a way for them to ensure these suppliers are compliant with food safety regulations, such as the Food Safety Modernization Act of 2011 (“ FSMA ”).
Removed
The Company’s services are delivered though proprietary software products designed, developed, marketed and supported by the Company. These products provide visibility and facilitate improved business processes among all key constituents in the supply chain, starting with the retailer and moving backwards to suppliers and eventually to raw material providers.
Removed
The Company provides cloud-based applications and services that address e-commerce, supply chain, food safety and compliance activities. The principal customers for the Company’s products are household name multi-store food retail chains and their suppliers, branded food manufacturers, food wholesalers and distributors, and other food service businesses. The Company has a hub and spoke business model.
Removed
The Company is typically engaged by retailers and wholesalers (“ Hubs ”), which in turn require their suppliers (“ Spokes ”) to utilize the Company’s services.
Removed
The Company is incorporated in the state of Nevada and has three principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned) (“ PCG Utah ”); Park City Group, Inc., a Delaware corporation (100% owned) (“ PCG Delaware ”); and ReposiTrak (100% owned) (PCG Utah, PCG Delaware, and ReposiTrak are, collectively, the “ Subsidiaries ”).
Removed
All intercompany transactions and balances have been eliminated in the Company’s consolidated financial statements, which contain the operating results of the operations of PCG Delaware and ReposiTrak. Park City Group has no business operations separate from the operations conducted through its Subsidiaries. The Company’s principal executive offices are located at 5282 South Commerce Drive, Suite D292, Murray, Utah 84107.
Removed
Its telephone number is (435) 645-2000. Its website address is www.parkcitygroup.com, and ReposiTrak’s website address is www.repositrak.com.
Removed
Recent Developments Dividend Payment On September 19, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.015 per share ($0.06 per year), payable to shareholders of record on September 29, 2023, to be paid to shareholders of record on or about November 11, 2023.
Removed
Based on the closing price on September 29, 2023, this represented an annual dividend yield of approximately 1.06%. Subsequent quarterly dividends will be paid within 45 days of the shareholders of record date of December 31, March 31, June 30 and September 30.
Removed
Redemption and Retirement of Preferred Stock On September 12, 2023, the Company announced its plans to commence the redemption and retirement of its 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 ”).
Removed
The Preferred Redemption is to occur over the next three years from September 12, 2023. 2 Global Pandemics, Bank Failures, and Geopolitical Conflicts The impact of global pandemics, including COVID 19, banking failures, geopolitical conflicts, including the war in Ukraine, creates much uncertainty in the global marketplace.
Removed
Management continues to monitor the ongoing impact of these events on all aspects of its business, including how they impact its services, customers, employees, vendors, and business partners now and in the future.
Removed
While these events did not materially adversely affect the Company’s financial results and business operations in the year ended June 30, 2023, we are unable to predict the impact that these events, including geopolitical conflicts, will have on its future financial position and operating results due to numerous uncertainties.
Removed
FSMA Section 204(d) In 2020, the United States Food & Drug Administration (“ FDA ”) announced the “New Era of Smarter Food Safety” blueprint.
Removed
It “outlines achievable goals to enhance traceability, improve predictive analytics, respond more rapidly to outbreaks, address new business models, reduce contamination of food, and foster the development of stronger food safety cultures.” But one particular section of the Food Safety Modernization Act (“ FSMA ”), Section 204(d) which has to deal with traceability, was left incomplete when the regulation was enacted in 2011.
Removed
FDA has been working for the last few years to define exactly what traceability means and what is required to comply with that section of the law. As part of the 2020 “New Era” announcement, FDA published the Food Traceability List or (“ FTL ”).
Removed
FDA used a “risk assessment model” to identify 16 of the highest-risk categories to start with. There is not a single grocery retailer who does not sell these items. These 16 categories represent thousands of individual items and FDA has made it clear in its communications the categories on the FTL are only the beginning.
Removed
FDA states that they would “encourage the voluntary adoption of these practices industry-wide,” which means more categories are expected to be added over time. On November 7, 2022, FDA announced the final rule on FSMA Section 204(d) and proposes it would become effective 60 days after publication in the Federal Register .
Removed
The proposed compliance date for all persons subject to the recordkeeping requirements would be 2 years after the effective date of the final regulation. For traceability, FDA requires the capture, creation and sharing of specific key data elements (“ KDE ”) at each designated Critical Tracking Event (“ CTE ”) for every item and every shipment.
Removed
FDA also requires the data be stored for two years and be retrievable and presented to them within 24 hours upon request. FSMA 204 is ultimately about recording all movement of inventories through the supply chain. The result is an enormous amount of data to manage.
Removed
At the root, it is a supply chain data management issue, which is ReposiTrak’s core expertise. That’s why we’ve made it our goal to develop a traceability solution that’s easy, inexpensive and exceeds FDA’s requirements with the guidance of industry thought leaders gathered in the Food Traceability Leadership Consortium.
Removed
As the largest connected network of food suppliers, wholesalers and retailers in the world, the ReposiTrak Traceability Network® is well positioned to provide end-to-end traceability to provide a safer food supply chain, tighten control on food waste and implement a food recall response that saves lives and money.
Removed
Company History The Company’s technology has its genesis in the operations of Mrs. Fields Cookies, a company co-founded by Randall K. Fields, the Company’s Chief Executive Officer. The Company began operations utilizing patented computer software and profit optimization consulting services to help its retail clients reduce their inventory and labor costs.
Removed
On January 13, 2009, the Company acquired 100% of Prescient Applied Intelligence, Inc., a Delaware corporation (“ Prescient ”), a provider of solutions for retailers which, among other things, captured information about transactions between retailers and their suppliers. In February 2014, Prescient changed its name to Park City Group, Inc.
Removed
As a result, both Park City Group and PCG Delaware were named Park City Group, Inc. 3 In June 2015, the Company elected to exercise an option to acquire a 75% interest in ReposiTrak from Leavitt Partners, LP for a cash payment and negotiated the purchase of the remaining 25% with an exchange of shares of the Company.
Removed
As a result, ReposiTrak became a wholly owned subsidiary of the Company. As of June 30, 2020, the Company completed its Supply Chain and Compliance and Food Safety, and MarketPlace supplier discovery and B2B e-commerce solution. As a result, the Company is now largely capable of delivering its services through a single ReposiTrak branded user interface.
Removed
As of June 30, 2023, the Company was substantially complete with its Audit Management solution providing a wide variety of Good Manufacturing Practices (“ GMP ”) and Global Food Safety Initiative (“ GFSI ”) approved audits. The new solution will help improve quality and safety by making audits more efficient and accurate through better corrective actions management and documentation.
Removed
Target Industries Overview The Company develops its software and services for multi-store retail chains, wholesalers and distributors, and their suppliers.
Removed
The bulk of the Company’s customers are in the U.S. consumer retail sector for food, convenience store, and general merchandise, although the Company’s software and services are not sold exclusively to this customer base, and the Company believes that its software and services are also applicable to a wide variety of other potential customers domestically and abroad.
Removed
Backdrop The U.S. consumer retail sector in general, which includes food, convenience store, and general merchandise retailers more acutely, are facing pressure from several significant forces.
Removed
These include (i) increased competitive pressures from the rise of online retailers, (ii) increased regulatory and tort risks, particularly for food retailers, as a result of the passage of the FSMA which placed greater responsibility for the safety of products on the participants in the food supply chain, and (iii) the pressure from consumers to increase product diversity, and in particular, the number of smaller, localized vendors.
Removed
Solutions and Services The Company’s software and services are designed to address the business problems faced by our customers. These solutions are delivered via a cloud-based infrastructure and grouped in three product application suites that mirror the workflow of the Company’s customers as they manage the activities of their supply chain.
Removed
Key Application Suites ● ReposiTrak MarketPlace is the Company’s supplier discovery and B2B e-commerce solution.
Removed
MarketPlace provides the Company’s customers with greater flexibility in sourcing products by enabling them to screen and choose suppliers based on a wide variety of criteria, including, but not limited to, compliance characteristics, and then to integrate these suppliers into their supply chain faster and more cost effectively.
Removed
MarketPlace helps the Company’s customers respond to competitive pressures from online retailers by providing them with greater capabilities to increase local sourcing, tailor their product offering to local market tastes, and stock their stores appropriately for local events.
Removed
MarketPlace is also beneficial to suppliers connected to ReposiTrak’s platform in that they can use MarketPlace to highlight the products that they sell to generate incremental sales. The business model for MarketPlace continues to evolve. In fiscal 2022, the Company primarily acted as an agent for suppliers and provided supply chain technology services for a monthly subscription fee.
Removed
In prior years, at the customer’s request, the Company has acted as the supplier for certain products whereby the Company secures products for a customer, adds a markup, and delivers the product for a profit.
Removed
Given the risk and uncertainties in the supply chain including price volatility, lower margins, and transactional revenue versus recurring revenue, the Company has reverted back to primarily acting as an agent for MarketPlace customers; however, there are no assurances that the Company may not opportunistically pursue acting as a supplier if the economic outcome is more in line with the margins of its other software solutions. ● ReposiTrak Compliance and Food Safety Solutions help the Company’s customers reduce potential regulatory and legal risk from their supply chain partners.
Removed
The Company does this by providing a way of gathering the array of documents that may be needed for the customer to determine that its suppliers are compliant with a wide variety of criteria including, but not limited to, food safety regulations, such as those required by the FMSA and general business compliance standards such as adequate liability insurance.
Removed
The Company’s Compliance and Food Safety solutions currently include four main applications: Vendor Validation, Compliance Management, QMS and Track & Trace. ReposiTrak also hosts and is integrated with the food safety audit database of the SQFI.
Removed
SQFI is one of the leading schemas for certifying that a food retailer’s suppliers are compliant with GFSI standards, which many food retailers require of their suppliers as a condition of doing business.
Removed
SQFI is owned and operated by the FMI, one of the food industry’s largest trade associations. 4 ● ReposiTrak Supply Chain Solutions help the Company’s customers to more efficiently manage relationships with suppliers so that they can “stock less and sell more” by reducing inventory, labor costs and waste while also increasing revenue.
Removed
The Company is a leader in helping its customers to manage their relationship with Direct Store Delivery (“ DSD ”) suppliers. The Company has observed that its customers are shifting a greater percentage of their product mix to DSD suppliers to lower their operating costs.
Removed
Through a process known as Scan Based Trading (“ SBT ”) the Company enables its customers to sell products from DSD suppliers on a consignment basis, which lowers their working capital requirements by shifting the financial burden of the inventory to the supplier.
Removed
Other Supply Chain solutions include ScoreTracker, Vendor Managed Inventory, Store Level Ordering and Replenishment, Enterprise Supply Chain Planning, Audit Management solutions, Fresh Market Manager and ActionManager®, all of which are designed to aid the Company’s customers in managing inventory, auditing, managing product mix and labor while improving sales through the reduction of out of stocks by improving visibility and forecasting.
Removed
Professional Services The Company has two professional services groups: (i) the Business Analytics Group offers business-consulting services to suppliers and retailers in the grocery, convenience store and specialty retail industries; and (ii) the Professional Services Group provides consulting services to ensure that our solutions are seamlessly integrated into our customers’ business processes as quickly and efficiently as possible.
Removed
Technology, Development and Operations Product Development The Company’s product development strategy is focused on creating common technology elements that can be leveraged in multiple applications across our core markets. To remain competitive, the Company is currently designing, coding and testing new products and developing expanded functionality of its current products.
Removed
Operations We currently serve our customers from a third-party data center hosting facility.
Removed
Along with the Company’s Statement on Standards for Attestation Engagements (“ SSAE ”) No. 16 certification Service Organization Control (“ SOC2 ”), the third-party facility is also a SSAE No. 16 – SOC2 certified location and is secured by around-the-clock guards, biometric screening and escort-controlled access, and is supported by multiple on-site backup generators in the event of a power failure.
Removed
Customers The Company is currently engaged primarily by food-related consumer goods retailers, wholesalers, and their suppliers. The bulk of the Company’s customers are in the U.S. consumer retail sector for food, convenience stores, and general merchandise. However, the Company is opportunistic and will offer its solutions to a wide variety of other potential customers.
Removed
No single customer exceeded 10% of the Company’s total revenue in the fiscal year ended June 30, 2023.
Removed
Sales, Marketing and Customer Support Sales and Marketing Through a focused and dedicated sales effort designed to address the requirements of each of its solutions, the Company believes it is well positioned to understand its customers’ businesses, trends in the marketplace, competitive products and opportunities for new product development. 5 The Company’s primary marketing objectives have been to increase awareness of our solutions, generate sales leads and develop new customer relationships.
Removed
To this end, the Company attends industry trade shows, conducts direct marketing programs and webinars, publishes industry trade articles, participates in interviews and selectively advertises in industry publications. In fiscal 2016, the Company embarked on a process of repurposing the Company’s supply chain applications so that they can be delivered via ReposiTrak’s highly scalable online infrastructure.
Removed
As a result, the Company is now largely capable of delivering its services through a single ReposiTrak branded user interface. With the convergence of the Company’s solutions to a single delivery platform, the Company also reorganized its sale force and reoriented its marketing efforts.
Removed
This process involved streamlining the sales force to enable cross-selling by reducing regional account managers and shifting our sales emphasis towards the Company’s inside remote sales team located largely in Utah.
Removed
Customer Support The Company’s global customer support group responds to both business and technical inquiries from its customers relating to how to use its solutions and is available to customers by telephone and email. Basic customer support during business hours is available to customers.
Removed
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. Competition The Company competes with a myriad of software vendors, developers and integrators, B2B exchanges, consulting firms, focused solution providers, and business intelligence technology platforms.
Removed
Although our competitors are often considerably larger companies in size with larger sales forces and marketing budgets, the Company believes that its deep industry knowledge, the breadth and depth of our offerings, and our long-standing relationships with key industry, wholesaler, and other trade groups and associations, gives it a competitive advantage.
Removed
Patents and Proprietary Rights The Company relies on a combination of trademark, copyright, trade secret and patent laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our name.
Removed
We also enter into confidentiality agreements with our employees, consultants and other third parties and control access to software, documentation and other proprietary information. The Company has been awarded nine U.S. patents, and a number of U.S. registered trademarks and U.S. copyrights relating to its software technology and solutions.
Removed
The Company’s patent portfolio has been transferred to an unrelated third party, although the Company retains the right to use the licensed patents in connection with its business.
Removed
The Company’s policy is to continue to seek patent protection for all developments, inventions and improvements that are patentable and have potential value to the Company and to protect its trade secrets and other confidential and proprietary information, and the Company intends to defend its intellectual property rights to the extent its resources permit.
Removed
The Company is not aware of any patent infringement claims against it; however, there are no assurances that litigation to enforce patents issued to the Company to protect proprietary information, or to defend against the Company’s alleged infringement of the rights of others will not occur.
Removed
Should any such litigation occur, the Company may incur significant litigation costs, and it may result in resources being diverted from other planned activities, which may have a materially adverse effect on the Company’s operations and financial condition. Employees As of June 30, 2023, the Company employed a total of 69 employees. Of these employees, 17 are located overseas.
Removed
The Company plans to continue expanding its offshore workforce to augment its analytics services offerings, expand its professional services and to provide additional programming resources.
Removed
The employees are not represented by any labor union. 6 Reports to Security Holders The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). Accordingly, it files annual, quarterly and other reports and information with the Securities and Exchange Commission (“ SEC ”).
Removed
The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Copies of these reports, proxy and information statements and other information may be obtained by electronic request at the following e-mail address: publicinfo@sec.gov.
Removed
Government Regulation and Approval Like all businesses, the Company is subject to numerous federal, state and local laws and regulations, including regulations relating to patent, copyright, and trademark law matters.
Removed
Cost of Compliance with Environmental Laws The Company currently has no costs associated with compliance with environmental regulations and does not anticipate any future costs associated with environmental compliance; however, there can be no assurance that it will not incur such costs in the future.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
10 edited+3 added−1 removed4 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
10 edited+3 added−1 removed4 unchanged
2023 filing
2024 filing
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.
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. 14 Table of Contents 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, 2024 and 2023: Remaining Amount Available for Dollars Future Total Expended Share Number by Period Repurchases of Shares Average Under the Under the Purchased Price Paid Plans or Plans or Period (1) by Period Per Share Programs Programs 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 Year Ended June 30, 2024: July 1, 2023 – September 30, 2023 155,025 $ 8.53 $ 1,322,082 $ 8,185,698 October 1, 2023 – December 31, 2023 22,012 $ 8.79 $ 193,492 $ 7,992,206 January 1, 2024 – March 31, 2024 - $ - $ - $ 7,992,206 April 1, 2024 – June 30, 2024 - $ - $ - $ 7,992,206 (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 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 ”).
Common Stock 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 ”).
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.
We currently intend to continue to declare and pay a quarterly cash dividend on Common Stock equal to $0.0165 per share ($0.066 per year) following our board of directors' periodic review of our financial condition and results of operations for each fiscal quarter.
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.
The following table sets forth the high and low sales prices of our Common Stock for the periods indicated: Quarterly Common Stock Price Ranges 2024 2023 Fiscal Quarter Ended High Low High Low September 30 $ 10.25 $ 8.27 $ 6.60 $ 4.31 December 31 $ 11.27 $ 8.50 $ 5.64 $ 4.57 March 31 $ 17.32 $ 9.66 $ 6.60 $ 4.83 June 30 $ 17.96 $ 14.23 $ 10.50 $ 6.24 13 Table of Contents 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.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Share Price History Our Common Stock is traded on the NASDAQ Capital Market under the trading symbol “PCYG”.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Share Price History Our Common Stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol “TRAK”. Prior to November 2, 2023, our Common Stock was traded on the Nasdaq Capital Market under the trading symbol “PCYG”.
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.
During the year ended June 30, 2024, the Company paid a quarterly cash dividend of $0.015 per share of Common Stock for the quarter ended September 30, 2023 and paid quarterly cash dividend of $0.0165 per share for each of the quarters ended December 31, 2023, March 31, 2024 and June 30, 2024.
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.
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.
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.
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.
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.
Holders of Record At June 30, 2024, there were 613 holders of record of our Common Stock with 18,234,893 shares issued and outstanding, 3 holders of Series B Preferred with 616,470 shares issued and outstanding.
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.
Since inception of the Share Repurchase Program through June 30, 2024, a total of $21,000,000 in shares of Common Stock have been approved under the Share Repurchase Program, and 2,122,703 shares of Common Stock have been repurchased at an average purchase price of $6.13, resulting in $7,992,206 remaining available to repurchase under the current Share Repurchase Program.
Removed
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.
Added
Dividends on the Series B Preferred and Series B-1 Preferred are payable quarterly.
Added
On August 31, 2021, our Board of Directors approved a further increase to its Share Repurchase program to $12.0 million in shares of our Common Stock which added an additional $4 million to the Share Repurchase Program.
Added
From time-to-time, our Board of Directors may authorize further increases to our Share Repurchase Program.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
41 edited+15 added−21 removed36 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
41 edited+15 added−21 removed36 unchanged
2023 filing
2024 filing
Biggest changeOverview Park City Group, Inc., a Nevada corporation (“ Park City Group ”, “ we ”, “ us ”, “ our ” or, the “ Company ”) is a Software-as-a-Service (“ SaaS ”) provider, and the parent company of ReposiTrak, Inc. a Utah corporation (“ ReposiTrak ”), a business-to-business (“ B2B ”) e-commerce, compliance, and supply chain management platform company that partners with retailers, wholesalers, and product suppliers to help them source, vet, and transact with their suppliers in order to accelerate sales, control risks, and improve supply chain efficiencies.
Biggest changeOverview ReposiTrak, Inc. is a SaaS which operates a B2B e-commerce, compliance & traceability, and supply chain management platform that partners with retailers, wholesalers, distributors and their product suppliers to (a) help them manage specific programs, such as out-of-stock management and scan-based trading; (b) reduce risk in their supply chain by managing compliance documents and data; ensure compliance with new regulatory requirements supporting traceability; and (c) improve product ordering and forecasting in order to accelerate sales, control risks, and improve supply chain efficiencies.
The Company’s 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 ”).
The Company’s increase in anticipated cash flow from operations and working capital position is expected to be offset by the use of cash required to fund the Company’s quarterly cash dividends of $0.015 per share, announced on September 28, 2022, December 30, 2022, February 10, 2023, March 21, 2023, June 20, 2023, September 19, 2023, and of $0.0165 per share, announced on December 12, 2023, March 18, 2024 and June 18, 2024, as well as the redemption and retirement of the Company’s Series B Convertible Preferred Stock and Series B-1 Preferred Stock (together, the “ Preferred Stock ”) for their stated value, or $10.70 for each share of Preferred Stock, resulting in an aggregate purchase price of $8,964,214.
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.
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. 16 Table of Contents 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.
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.
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. 17 Table of Contents 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.
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.
The Credit Agreement contained customary affirmative and negative covenants and conditions to borrowing, as well as customary events of default. Among other things, the Company must maintain liquid assets equal to $12 million and maintain a Senior Funded Debt (as defined in the Credit Agreement) to EBITDA Ratio (as defined in the Credit Agreement) of not more than 3:1.
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).
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).
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.
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 rare instances, the Company may sell its software in the form of a license. License arrangements are a time-specific and perpetual license.
These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States of America (“ GAAP ”). These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations.
These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the U.S. (“ GAAP ”). These non-GAAP financial measures exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements and are subject to inherent limitations.
The Company has a hub and spoke business model, whereby the Company is typically engaged by retailers and wholesalers (“ Hubs ”), which in turn require their suppliers (“ Spokes ”) to utilize the Company’s services.
The Company has a hub and spoke business model, whereby the Company is typically engaged by Hubs, which in turn require their Spokes to utilize the Company’s services.
Dividends remained flat in the comparable periods. Financial Position, Liquidity and Capital Resources We believe that our existing cash and short-term investments, together with funds generated from operations, are sufficient to fund operating and investment requirements for at least the next twelve months.
Financial Position, Liquidity and Capital Resources We believe that our existing cash and short-term investments, together with funds generated from operations, are sufficient to fund operating and investment requirements for at least the next twelve months.
The Credit Agreement replaces the Company’s prior $6.0 million Revolving Credit Agreement and Stand-Alone Revolving Note between the Company and the Bank, as amended and revised on January 9, 2019, and provides the Company with a $10.0 million revolving line of credit that matures on March 31, 2023.
The Credit Agreement replaced the Company’s prior $6.0 million Revolving Credit Agreement and Stand-Alone Revolving Note between the Company and the Bank, as amended and revised on January 9, 2019, and provided the Company with a $10.0 million revolving line of credit that matured on March 31, 2023.
The 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.
The Company’s fiscal year ends on June 30. References to fiscal 2024 refer to the fiscal year ended June 30, 2024, and references to fiscal 2023 refer to the fiscal year ended June 30, 2023. 15 Table of Contents Sources of Revenue The principal customers for the Company’s products are multi-store retail chains, wholesalers and distributors, and their suppliers.
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.
The risks have elevated regulatory requirements, documentation requisites, and principally “where does your food come from” transparency on grocery retailers and their suppliers. As more and more retailers, wholesalers and distributors adopt the increased regulatory disclosure requirements, the Company has seen a corresponding rise in demand for its services.
The Company derives revenue from five sources: (i) subscription fees, (ii) transaction-based fees, (iii) professional services fees, (iv) license fees, and (v) hosting and maintenance fees. A significant portion of the Company’s revenue is generated from its Supply Chain solutions and Compliance and Food Safety solutions in the form of recurring subscription payments from the suppliers.
The Company derives revenue from five sources: (i) subscription fees, (ii) transaction-based fees, (iii) professional services fees, (iv) license fees, and (v) hosting and maintenance fees. A significant portion of the Company’s revenue is generated from its Compliance and Supply Chain Food Safety solutions, with a growing portion of the revenue derived from its newest Traceability solution.
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.
Preferred Dividends Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Preferred dividends $ 549,645 $ (36,799 ) -6 % $ 586,444 Percent of total revenue 3 % 3 % Dividends accrued on the Company’s Series B Preferred and Series B-1 Preferred was $549,645 and $586,444 for the years ended June 30, 2024 and 2023, respectively, a decrease of 6%.
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.
The increase in revenue was due to growth in recurring subscription revenue, in all lines of business, which includes compliance, supply chain and traceability. This is the result of growing industry and consumer response to food contaminations and food safety hazards, whether biological, chemical, physical, or allergenic.
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%.
Sales and Marketing Expense Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Sales and marketing $ 5,492,719 $ 559,314 11 % $ 4,933,405 Percent of total revenue 27 % 26 % The Company’s sales and marketing expense was $5,492,719, or 27% of total revenue, as compared to $4,933,405, or 26% of total revenue, for the fiscal years ended June 30, 2024 and 2023, respectively, an increase of 11%.
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%.
Results of Operations – Fiscal Years Ended June 30, 2024 and 2023 Revenue Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Revenue $ 20,453,320 $ 1,354,410 7 % $ 19,098,910 During the fiscal year ended June 30, 2024, the Company had revenue of $20,453,320 as compared to $19,098,910 for the year ended June 30, 2023, an increase of 7%.
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.
Other Income and Expense Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Net other income $ 1,308,550 $ 487,468 59 % $ 821,082 Percent of total revenue 6 % 4 % Net other income was $1,308,550 compared to net other income of $821,082 for the years ended June 30, 2024 and 2023, respectively.
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%.
Nonetheless, we will continue to deemphasize non-recurring transactional revenue when we are able. 18 Table of Contents Cost of Services and Product Support Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Cost of service and product support $ 3,416,450 $ 107,105 3 % $ 3,309,345 Percent of total revenue 17 % 17 % Cost of services and product support was $3,416,450, or 17% of total revenue, and $3,309,345 or 17% of total revenue for the years ended June 30, 2024 and 2023, respectively, an increase of 3%.
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.
Net Cash Flows from Financing Activities Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Cash used in financing activities $ (5,700,711 ) $ 273,810 5 % $ (5,426,901 ) Net cash used in financing activities totaled $5,700,711 for the year ended June 30, 2024 compared to net cash used in financing activities of $5,426,901 for the year ended June 30, 2023.
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.
Noncash expense decreased by $836,111 for the year ended June 30, 2024 compared to the year ended June 30, 2023 as a result of a decrease in bad debt expense and stock compensation expense offset by an increase in depreciation and amortization.
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%.
General and Administrative Expense Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 General and administrative $ 5,330,437 $ 644,654 14 % $ 4,685,783 Percent of total revenue 26 % 25 % The Company’s general and administrative expense was $5,330,437, or 26% of total revenue, and $4,685,783 or 25% of total revenue for the years ended June 30, 2024 and 2023, respectively, an increase of 14%.
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.
Net Cash Flows from Operating Activities Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Cash provided by operating activities $ 6,964,401 $ (1,895,618 ) -21 % $ 8,860,019 20 Table of Contents Net cash provided by operating activities is summarized as follows: Year Ended Year Ended June 30, 2024 June 30, 2023 Net income $ 5,958,290 $ 5,590,289 Noncash expense and income, net 1,992,120 2,828,231 Net changes in operating assets and liabilities (986,009 ) 441,499 $ 6,964,401 $ 8,860,019 Net cash provided by operating activities for the year ended June 30, 2024 was $6,694,401 compared to net cash provided by operating activities of $8,860,019 for the year ended June 30, 2023.
Subscription fees can be based on a negotiated flat fee per supplier, or some volumetric metric, such as the number of stores, or the volume of economic activity between a retailer and its suppliers. Subscription revenue contains arrangements with customers for use of the application, application and data hosting, maintenance of the application, and standard support.
The revenue generated is primarily in the form of a recurring subscription payment from the suppliers. Subscription fees can be based on a negotiated flat fee per supplier, or some volumetric metric, such as the number of stores, or the volume of economic activity between a retailer and its suppliers.
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%.
Depreciation and Amortization Expense Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Depreciation and amortization $ 1,189,483 $ 109,684 10 % $ 1,079,799 Percent of total revenue 6 % 6 % 19 Table of Contents The Company’s depreciation and amortization expense was $1,189,483 and $1,079,799 for the years ended June 30, 2024 and 2023, respectively, an increase of 10%.
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.
The Amendment sets forth that (1) the Company will increase its liquidity requirement from $10 million to $12 million, which the Company currently maintains over $22 million in cash and a current ratio of over 6:1, and (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.
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.
Contractual Obligations Total contractual obligations and commercial commitments as of June 30, 2024 are summarized in the following table: Operating Leases Financing Leases Less than 1Year $ 75,491 $ 220,267 1-3 Years 157,842 - 3-5 Years 54,449 - Total lease payments 287,782 220,267 Less imputed interest (24,734 ) (2,296 ) Total $ 263,048 $ 217,971 22 Table of Contents 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.
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.
The increase in current assets is primarily attributable to the increase in cash and accounts receivables offset by a decrease of prepaid expense and other current assets.
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.
As of Variance June 30, 2024 June 30, 2023 Dollars Percent Cash and cash equivalents $ 25,153,862 $ 23,990,879 $ 1,162,983 5 % 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.
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.
The increase in sales and marketing expense was primarily the result of an increase in commission, trade show expense, investment in FSMA 204 traceability marketing, and higher sales travel expense. As the pandemic concerns have been reduced, customers and prospects are returning to in person meetings and participation in large tradeshows.
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.
Net Cash Flows Used in Investing Activities Year Ended $ % Year Ended June 30, 2024 Change Change June 30, 2023 Cash used in investing activities $ (100,707 ) $ (802,480 ) -89 % $ (903,187 ) Net cash used in investing activities for the year ended June 30, 2024 was $100,007 compared to net cash used in investing activities of $903,187 for the year ended June 30, 2023.
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.
On April 28, 2023, the Company and the Bank executed an amendment to the Credit Agreement (the “ Amendment ”), with an effective date of March 31, 2023.
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.
On October 6, 2021, the Company and the Bank executed a Revolving Credit Agreement (the " Revolving Credit Agreement ”) and accompanying addendum (the " Addendum "), and Stand-Alone Revolving Note (the " Note " and collectively with the Revolving Credit Agreement and Addendum, the " Credit Agreement "), with an effective date of September 30, 2021.
The 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.
The ERC was a refund of certain payroll taxes for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts. During the prior fiscal year, the Company received approximately $1.175 million in payroll tax refunds, net of fees.
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 ”).
This decrease in cash used in investing activities for the for fiscal 2024 was due to capitalization of certain software costs and purchases of property and equipment in the prior fiscal year that did not occur in the current fiscal year.
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.
As of As of Variance June 30, 2024 June 30, 2023 Change Percent Current liabilities $ 4,543,142 $ 4,232,421 $ 310,721 7 % Current ratio 6.45 % 6.44 % $ 0.00 0 % Current liabilities totaled $4,543,142 as of June 30, 2024 as compared to $4,232,421 as of June 30, 2023.
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.
As of As of Variance June 30, 2024 June 30, 2023 Dollars Percent Current assets $ 29,300,167 $ 27,274,620 $ 2,025,547 7 % 21 Table of Contents Current assets totaled $29,300,167 as of June 30, 2024, as compared to $27,274,620 as of June 30, 2023.
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.
Liquidity and Working Capital At June 30, 2024, the Company had positive working capital of $24,757,025, as compared with positive working capital of $23,042,199 at June 30, 2023.
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.
The increase in net cash used in financing activities is due to the payment of higher Common Stock dividends, the purchase of Common Stock under the Share Repurchase Program, and the redemption and retirement of shares of Preferred Stock.
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.
The ERC credit was partially offset by increases in bad debt expense and increases in cost of benefits for employees.
Removed
The Company’s services are grouped in three application suites: (i) ReposiTrak MarketPlace (“ MarketPlace ”), encompassing the Company’s supplier discovery and B2B e-commerce solutions, which helps the Company’s customers find new suppliers; (ii) ReposiTrak Compliance and Food Safety (“ Compliance and Food Safety ”) solutions, which help the Company’s customers vet suppliers to mitigate the risk of doing business with these suppliers; and (iii) ReposiTrak’s Supply Chain (“ Supply Chain ”) solutions, which help the Company’s customers to more efficiently manage their various transactions with their suppliers.
Added
The Company’s services are grouped in three application suites: ReposiTrak Compliance Management (“ Compliance ”) solutions, which helps the Company’s customers vet suppliers and reduce a company’s potential regulatory, legal, and criminal risk from its supply chain partners by providing a way for them to ensure these suppliers are compliant with food safety regulations, such as the Food Safety Modernization Act of 2011 (“ FSMA ”); ReposiTrak Traceability Network (“ Traceability ” or “ RTN ”), which helps the Company’s customers comply with federal regulatory requirements of traceability and provides the lowest cost, easiest to use way to manage the capture and sharing of key data elements (“ KDEs ”) now required by Section 204d of FSMA 2011 as designated products move through the supply chain at each ‘event’ known as a ‘critical tracking event’ or “CTE”, which includes tracking from farm to shelf; and ReposiTrak Supply Chain Solutions (“ Supply Chain ”), which help the Company’s customers to more efficiently manage various interactions with their suppliers.
Removed
Revenue from the Company’s MarketPlace sourcing solution historically has been transactional, based on the volume of products sourced via the application. MarketPlace revenue can come from several sources depending on the customer’s specific requirements.
Added
In other words, it provides customers with greater flexibility in sourcing products by enabling them to choose new suppliers and integrate them into their supply chain faster and more cost effectively, and it helps them to manage these relationships more efficiently, enhancing revenue while lowering working capital, labor costs and reducing waste.
Removed
These include acting as an agent for a supplier, providing supply chain technology services, and enabling a Hub to reduce its number of new suppliers by acting as the supplier for any number of products.
Added
Subscription revenue contains arrangements with customers for use of the application, application and data hosting, maintenance of the application, and standard support.
Removed
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.
Added
This increase is primarily the result of cybersecurity spending and increased offshore developer headcount and support services in effort to support the acceleration and expansion of the FSMA 204 initiative. Given the demand in traceability the Company has also expended additional resources on further upgrading its information security services and confidentiality protocols to increase protection of customer data.
Removed
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.
Added
The largest contributors to the increase in sales and marketing expense has been an increase in commission and FSMA 204 traceability marketing. We believe the uptick in marketing costs will flatten over the next twelve months as awareness of the 2026 traceability regulatory deadline approaches.
Removed
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.
Added
The increase in general and administrative expense was primarily due to refund of payroll taxes associated with the Employee Retention Credit (“ ERC ”) that occurred in the prior fiscal year that did not reoccur in fiscal 2024.
Removed
We increased spending by $72,112 in the areas of detection, response and recovery during the period.
Added
The increase was due to additional assets acquired in the prior fiscal year. Given the rising global hacks on software companies, banks, and financial institutions, we spent approximately $440,000 on security, backup, storage, and redundancy. The upgrades were financed through a leasing agent with an effective APR rate of 4.78%.
Removed
The largest contributor to the increase in sales and marketing expense has been an increase in travel cost and trade shows.
Added
Other income increased due to higher cash balances and an increase in interest income attributable to higher interest rates on fixed income instruments. As the Federal Reserve begins to cut rates in the future, it is unlikely the Company will be able to maintain the same interest income on its existing cash balances without taking additional credit risk.
Removed
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.
Added
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.
Removed
In many cases, this requires multiple onsite meetings with distribution centers, warehouse operations, and store locations.
Added
(the “ Bank ”), which was revised on October 6, 2021, and again in 2022. In March 2024, given our strong financial position, we terminated the credit facility with our bank. Cash was $25,153,862 and $23,990,879 at June 30, 2024 and 2023, respectively. This 5% increase is primarily the result of higher revenue and the corresponding cash receipts from customers.
Removed
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
It also includes higher interest income earnings associated with growing cash balances.
Removed
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
Net cash provided by operating activities decreased 21% due principally to the receipt of the ERC refund in fiscal 2023, that did not reoccur in fiscal 2024, an increase in accounts receivable due to an increase in subscription sales, and a decrease in accounts payable and other obligations that had become due.
Removed
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.
Added
This $1,714,826 increase in working capital is primarily due to an increase in accounts receivable and decrease in prepaid and other assets offset by a decrease in contract liabilities and an increase in deferred revenue. Cash and cash equivalents also increased due to cash receipts from customers who have signed up for, among other offerings, the ReposiTrak Traceability Network.
Removed
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.
Added
The increase in current liabilities is primarily attributable to the increase in deferred revenue offset by a decrease in accrued liabilities and financing lease liabilities due to capital expenditures on cybersecurity, storage and other information technology services. As of June 30, 2024, the Company had zero bank debt.
Removed
Cash was $23,990,879 and $21,460,948 at June 30, 2023 and 2022, respectively.
Added
As of March 31, 2024, the balance of the facility was zero. The Company had zero bank debt at June 30, 2024. On March 15, 2024, given its strong financial position, the Company chose not to renew the Revolving Credit Agreement. There were no amounts due at the time of renewal.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.