ReposiTrak, Inc. (TRAK)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements. 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 those risks factors contained in our June 30, 2025 Annual Report on Form 10-K, incorporated by reference herein. Statements made herein are as of the date of the filing of this Report with the Securities and Exchange Commission (“SEC”) and should not be relied upon as of any subsequent date. 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.

Overview

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

The Company’s services are grouped in three application suites:

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

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

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

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On December 21, 2023, the Company effected a change of its corporate name from Park City Group, Inc. to ReposiTrak, Inc. The Company is incorporated in the State of Nevada and has two principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned) (“PCG Utah”), and Park City Group, Inc., a Delaware corporation (100% owned) (“PCG Delaware” and together with PCG Utah, the “Subsidiaries”). All intercompany transactions and balances have been eliminated in the Company’s consolidated financial statements, which contain the Company’s results from operations. The Company 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. Its telephone number is (435) 645-2000. Its website address is www.repositrak.com.

Recent Developments

Dividend Payment

On March 20, 2026, The Company's Board of Directors declared a quarterly cash dividend of $0.02 per share ($0.08 per year), payable on or about May 15, 2026 to shareholders of record as of March 31, 2026. Based on the closing prices on March 31, 2026, this represented an annual dividend yield of approximately 1.05%. Subsequent dividends will be paid within 45 days of each fiscal quarter end.

Federal Regulation & Traceability: FSMA 204(d) and USDA SOE

In 2020, the United States Food and Drug Administration (“FDA”) announced the “New Era of Smarter Food Safety” blueprint, outlining objectives to enhance traceability, strengthen predictive analytics, accelerate outbreak response, address evolving business models, reduce food contamination, and promote a more robust food safety culture.

In November 2022, the FDA issued the final rule under the Food Safety Modernization Act Section 204(d) (“FSMA 204”) relating to traceability for high-risk foods. The rule became effective on January 20, 2023, and applies broadly to entities that manufacture, process, pack, or hold foods designated on the FDA’s Food Traceability List (“FTL”). The FTL encompasses 16 food categories, representing thousands of products commonly distributed across grocery, convenience, and foodservice channels.

FSMA 204 requires impacted entities to establish traceability programs capable of capturing, creating, maintaining, and sharing specified Key Data Elements (“KDEs”) at defined Critical Tracking Events (“CTEs”) throughout the supply chain. These records must be retained for a minimum of two years and be retrievable within 24 hours upon request by the FDA. Compliance necessitates the management of substantial volumes of supply chain data across a highly fragmented network of more than one million facilities.

In March 2025, the FDA extended the compliance deadline for FSMA 204 by 30 months to July 20, 2028. Despite this extension, adoption of traceability solutions continues to accelerate due to commercial and competitive pressures. Several major retailers have announced traceability requirements that exceed the scope of FSMA 204, including requirements for additional data elements, application across all food categories (not limited to the FTL), and implementation timelines preceding FDA enforcement.

While the FTL currently defines the regulatory scope, the FDA has indicated that it views these requirements as foundational and encourages broader, industry-wide adoption. Early indicators suggest the industry is moving toward comprehensive traceability across all food products.

Traceability is fundamentally a supply chain data management challenge, which aligns with the Company’s core competencies. The Company has developed the ReposiTrak Traceability Network (“RTN”), a scalable, cloud-based solution designed to facilitate compliant traceability through low-cost, rapid deployment across supplier, distributor, and retailer networks. The RTN connects thousands of supply chain participants and is designed to support end-to-end traceability, improve recall responsiveness, and enhance food safety outcomes.

Patent-Pending Technology

The Company has developed proprietary, patent-pending technologies designed to address critical challenges associated with large-scale traceability data management. These innovations focus on (i) the automated detection and correction of errors in supply chain traceability data and (ii) the generation of compliant traceability records without reliance on case-level scanning or probabilistic methods.

The first patent-pending technology relates to the use of advanced algorithms and machine learning techniques to identify inconsistencies, omissions, and inaccuracies within traceability datasets and to automatically correct such errors in real time. This capability is intended to materially improve data integrity, reduce manual intervention, and increase confidence in compliance with regulatory requirements.

The second patent-pending technology relates to the Company’s ability to generate end-to-end traceability records across distribution environments without requiring physical scanning of individual cases. This approach leverages system-level data integration and validation techniques to create compliant Key Data Element records at each Critical Tracking Event, enabling scalable deployment in high-volume distribution operations.

These patent-pending innovations are integral to the Company’s traceability platform and are designed to enhance scalability, reduce implementation complexity, and differentiate the Company’s offering in a rapidly evolving regulatory and commercial environment.

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Results of Operations

Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025.

Revenue

Revenue was $5,883,198 and $5,913,732 for the three months ended March 31, 2026 and 2025, respectively, a 1% decrease year-over-year. The decrease in revenue was due to the timing of a large increase in onboarding fees that occurred in fiscal 2025 that did not occur in the same period of fiscal 2026 offset partially by growth in all lines of business.

Although no assurances can be given, we continue to focus our sales efforts on marketing our software services on a recurring subscription basis and placing less emphasis on transactional revenue. However, we believe there will continue to be an insignificant percentage of customers that will, from time to time, require buying a particular service outright (i.e., a license). We have and will continue to deemphasize non-recurring transactional revenue when we are able.

Cost of Services and Product Support

Cost of services and product support was $803,353 and $911,693 for the three months ended March 31, 2026 and 2025, respectively, a 12% decrease. This $108,340 decrease is primarily the result of certain development costs to

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis is intended to assist the reader in understanding our results of operations and financial condition. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements beginning on page F-1 of this Annual Report on Form 10-K (this "Annual Report"). This Annual Report includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). All statements, other than statements of historical fact, included in this Annual Report that address activities, events or developments that we expect, project, believe, or anticipate will or may occur in the future, including matters having to do with expected and future revenue, our ability to fund our operations and repay debt, business strategies, expansion and growth of operations and other such matters, are forward-looking statements. These statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. These statements are subject to a number of assumptions, risks and uncertainties, including general economic and business conditions, the business opportunities (or lack thereof) that may be presented to and pursued by us, our performance on our current contracts and our success in obtaining new contracts, our ability to attract and retain qualified employees, and other factors, many of which are beyond our control. You are cautioned that these forward-looking statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in such statements.

Overview

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 fiscal year ends on June 30. References to fiscal 2025 refer to the fiscal year ended June 30, 2025, and references to fiscal 2024 refer to the fiscal year ended June 30, 2024.

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Sources of Revenue

The principal customers for the Company’s products are multi-store retail chains, wholesalers and distributors, and their suppliers. 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.

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.

The Company’s services are grouped in three application suites:

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. 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. Subscription revenue contains arrangements with customers for use of the application, application and data hosting, maintenance of the application, and standard support.

The Company also provides professional consulting services targeting implementation, assessments, profit optimization and support functions for its applications and related products, for which revenue is recognized on a percentage-of-completion or pro rata basis over the life of the subscription, depending on the nature of the engagement. 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. Software license maintenance agreements are typically annual contracts, paid in advance or according to terms specified in the contract. When sold as a license, the Company’s software is usually accompanied by a corresponding maintenance and/or hosting agreement to support the service.

Software maintenance agreements provide the customer with access to new software enhancements, maintenance releases, patches, updates and technical support personnel. Our hosting services provide remote management and maintenance of our software and customers’ data, which is physically located in third-party facilities. Customers access “hosted” software and data through a secure internet connection.

Revenue Recognition

Effective July 1, 2018, we adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2014-09: Revenue from Contracts with Customers (Topic 606), and its related amendments (“ASU 2014-09”). ASU 2014-09 provides a unified model to determine when and how revenue is recognized and enhances certain disclosure around the nature, timing, amount and uncertainty of revenue and cash flows arising from customers.

ASU 2014-09 represents a change in the accounting model utilized for the recognition of revenue and certain expense arising from contracts with customers. 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.

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To supplement our financial statements, historically we have provided investors with adjusted EBITDA and non-GAAP income per share, both of which are non-GAAP financial measures. We believe that these non-GAAP measures may provide useful information regarding certain financial and business trends relating to our financial condition and operations. Our management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analyses and planning purposes. These measures are also presented to our Board of Directors.

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. Investors should review the reconciliations of non-GAAP financial measures to the comparable GAAP financial measures that are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Critical Accounting Policies

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses the Company’s financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expense during the reporting period.

On an ongoing basis, management evaluates its estimates and assumptions based on historical experience of operations and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Income Taxes

In determining the carrying value of the Company’s net deferred income tax assets, the Company must assess the likelihood of sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions, to realize the benefit of these assets. If these estimates and assumptions change in the future, the Company may record a reduction in the valuation allowance, resulting in an income tax benefit in the Company’s statements of operations. Management evaluates quarterly whether to realize the deferred income tax assets and assesses the valuation allowance.

Goodwill and Other Long-Lived Asset Valuations

Goodwill is assigned to specific reporting units and is reviewed for possible impairment at least annually or upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Management reviews the long-lived tangible and intangible assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Management evaluates, at each balance sheet date, whether events and circumstances have occurred which indicate possible impairment.

The carrying value of a long-lived asset is considered impaired when the anticipated cumulative undiscounted cash flows of the related asset or group of assets is less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the estimated fair market value of the long-lived asset. Economic useful lives of long-live

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