Park City Group Reports Second Quarter Fiscal 2014 Results

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Fiscal 2Q14 Subscription Revenue Growth Rate Accelerates to a Record 20%



ReposiTrak Venture's Pipeline Grows to Several Thousand Connections

SALT LAKE CITY, Feb. 13, 2014 (GLOBE NEWSWIRE) -- Park City Group (Nasdaq:PCYG), a cloud-based software company that uses big data management to help retailers and their suppliers sell more, stock less and see everything, today announced record results for its fiscal second quarter ended December 31, 2013. In addition, the Company announced significant progress with several key strategic initiatives.

Strategic and financial highlights include:

  • Record subscription revenue – Subscription revenue for the second fiscal quarter increased 20 percent year over year to a record $2.3 million, primarily related to growth in the Company's supply chain services. Combined with other revenue, total revenue increased 14 percent to $3.0 million. "Our core business has clearly accelerated and is well-positioned for continued double-digit growth over the next several years," said Randall K. Fields, Park City Group's Chairman and CEO.
  • Acceleration of ReposiTrak™ venture as food and drug safety standard – During the quarter, ReposiTrak, the Company's food and drug safety venture with Leavitt Partners, announced a joint agreement with the Food Marketing Institute (FMI). This leading supermarket industry trade association has agreed to exclusively endorse and encourage the use of ReposiTrak among its food retail and wholesale members. "With a membership base of more than 40,000 food retailers and 25,000 pharmacies, the exclusive relationship with FMI, clearly positions ReposiTrak as the standard for food and drug safety tracking and tracing," said Mr. Fields. "ReposiTrak's base of customer connections is accelerating and its rapidly-growing pipeline already exceeds several thousand connections among its initial ROFDA wholesale customers."
  • Continued progress with national retailers and suppliers – During the second quarter, the Company continued to make progress with the test programs of large national retailers and suppliers. "Tests combining several of our subscription services are clearly demonstrating significant economic value to retailers and their suppliers and are beginning to transition into expanded relationships," said Mr. Fields. "In addition, these programs are raising our profile in the supermarket and consumer packaged goods industry, which also bodes well for the continued growth of our core supply chain business."

A Subscription Revenue Growth chart is available here: http://media.globenewswire.com/cache/14562/file/24670.pdf

Total operating expenses during the quarter ended December 31, 2013 were $3.6 million, an increase of $909,000 from the same quarter a year ago, and a decrease of $229,000 sequentially from the first quarter of fiscal 2014. The majority of the increase in operating expenses reflects increased investment in sales, marketing and account management personnel. "Given the sizable opportunities that we have in hand, we have increased our staffing levels," said Mr. Fields.

Net loss applicable to common shareholders for the second fiscal quarter was ($705,000), or ($0.04) per share, as compared to ($353,000), or ($0.03) per share during the prior year period. Non-GAAP income to common shareholders for the second quarter was $0.02 per share, as compared to income per share of $0.01 during the same period last year.

Total cash at December 31, 2013 was $3.9 million, as compared to $1.1 million at December 31, 2012, and debt levels decreased by 17 percent to $2.0 million, versus $2.4 million at the same time last year.

The Company will host a conference call at 4:15 P.M. Eastern today, February 13, 2014, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 44831093. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com.

About Park City Group

Park City Group (Nasdaq:PCYG) is a Software-as-a-Service ("SaaS") provider that brings unique visibility to the consumer goods supply chain, delivering actionable information that ensures product is on the shelf when the consumer expects it as well as providing food safety tracking information. The Company's service increases customers' sales and profitability while enabling lower inventory levels and ensuring regulatory compliance for both retailers and their suppliers. Through a process known as Consumer Driven Sales Optimization, Park City Group helps its customers turn information into cash and increased sales, using the largest scan based platform in the world, and provides retail trading partners with a distinct competitive advantage to store/SKU level visibility that sets the supply chain in motion. And since it is scan based, it can be used in a Direct Store Delivery (DSD) or warehouse setting. More information is available at www.parkcitygroup.com.

About ReposiTrak™

ReposiTrak is a robust solution created through collaboration between Leavitt Partners and Park City Group that helps food retailers and suppliers reduce supply chain risk, protect their brands and remain in compliance with rapidly evolving regulations in the Food Safety Modernization Act. Powered by Park City Group's technology, ReposiTrak is an internet-based solution that enables all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners. More information is available at www.repositrak.com.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission: non-GAAP EBITDA, non-GAAP earnings per share, net debt and free cash flow. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures to the nearest comparable GAAP measures will be provided upon the completion of the Company's annual audit.

Non-GAAP EBITDA excludes items such as impairment charges, allowance for doubtful accounts, charges to consolidate and integrate recently acquired businesses, costs of closing corporate facilities, non-cash stock based compensation and other one-time cash and non-cash charges. Non-GAAP EPS excludes items such as non-cash stock based compensation, charges to consolidate and integrate recently acquired businesses, costs for closing corporate facilities, amortization of acquired intangible assets and other one-time cash and non-cash charges. Net debt is the total debt balance less the cash balance. Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. The Company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses or net purchases of property and equipment, as the case may be, which may not be indicative of its core operation results and business outlook. In addition, because Park City Group has historically reported certain non-GAAP results to investors, the Company believes that the inclusion of non-GAAP measures provides consistency in the Company's financial reporting.

Forward-Looking Statement

Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to Park City Group, Inc. ("Park City Group") are intended to identify such forward-looking statements. Park City Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in Park City's annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made.

PARK CITY GROUP, INC.
Consolidated Condensed Balance Sheets
December 31, June 30,
Assets 2013 2013
Current Assets:
Cash and cash equivalents $ 3,859,451 $ 3,616,585
Receivables, net of allowance of $115,000 and $190,000 at December 31, 2013 and June 30, 2013, respectively 2,904,634 2,383,366
Prepaid expense and other current assets 290,165 403,909
Total current assets 7,054,250 6,403,860
Property and equipment, net 846,543 671,959
Other assets:
Deposits and other assets 14,866 14,866
Note receivable 2,097,452 1,622,863
Customer relationships 2,129,177 2,340,335
Goodwill 4,805,933 4,805,933
Capitalized software costs, net -- 73,082
Total other assets 9,047,428 8,857,079
Total assets $ 16,948,221 $ 15,932,898
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 698,625 $ 653,655
Accrued liabilities 1,386,508 1,096,982
Deferred revenue 1,683,221 1,777,326
Line of credit 1,200,000 1,200,000
Note payable 332,723 551,421
Total current liabilities 5,301,077 5,279,384
Long-term liabilities:
Notes payable, less current portion 474,588 310,642
Other long-term liabilities 99,709 101,500
Total liabilities 5,875,374 5,691,526
Commitments and contingencies
Stockholders' equity:
Series B Convertible Preferred stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at December 31, 2013 and June 30, 2013 4,119 4,119
Common stock, $0.01 par value, 50,000,000 shares authorized; 16,742,115 and 16,128,530 issued and outstanding at December 31, 2013 and June 30, 2013, respectively 167,421 161,285
Additional paid-in capital 46,046,721 43,314,986
Accumulated deficit (35,145,414) (33,239,018)
Total stockholders' equity 11,072,847 10,241,372
Total liabilities and stockholders' equity (deficit) $ 16,948,221 $ 15,932,898
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2013 2012 2013 2012
Revenues:
Subscription $ 2,344,178 $ 1,955,562 $ 4,478,834 $ 3,910,157
Other Revenue 675,436 703,340 1,316,716 1,461,572
Total revenues 3,019,614 2,658,902 5,795,550 5,371,729
Operating expenses:
Cost of services and product support 1,246,443 1,099,165 2,455,546 2,179,649
Sales and marketing 1,129,832 763,301 2,369,475 1,343,657
General and administrative 979,144 595,407 2,127,617 1,169,501
Depreciation and amortization 240,727 230,455 468,302 460,523
Total operating expenses 3,596,146 2,688,328 7,420,940 5,153,330
Income (loss) from operations (576,532) (29,426) (1,625,390) 218,399
Other income (expense):
Interest income (expense) 26,447 (34,435) 27,940 (77,868)
Income (loss) before income taxes (550,085) (63,861) (1,597,450) 140,531
(Provision) benefit for income taxes: -- -- -- --
Net income (loss) (550,085) (63,861) (1,597,450) 140,531
Dividends on preferred stock (154,473) (289,300) (308,946) (499,280)
Net income (loss) applicable to common shareholders $ (704,588) $ (353,161) $ (1,906,396) $ (358,749)
Weighted average shares, basic and diluted 16,693,000 12,303,000 16,529,000 12,259,000
Basic and diluted loss per share $ (0.04) $ (0.03) $ (0.12) $ (0.03)
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Cash Flows (Unaudited)
For the 6 months Ended
December 31,
2013 2012
Cash Flows from Operating Activities:
Net (loss) income $ (1,597,450) $ 140,531
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 468,302 460,523
Stock issued for charitable contribution 96,900 --
Stock compensation expense 855,190 449,719
Bad debt expense 60,008 --
Decrease (increase) in:
Receivables (581,276) (208,976)
Prepaids and other assets 39,155 (81,607)
Increase (decrease) in:
Accounts payable 44,970 218,252
Accrued liabilities 50,375 34,458
Deferred revenue (94,105) (214,934)
Net cash provided by operating activities (657,931) 797,966
Cash Flows From Investing Activities:
Cash from sale of property and equipment 6,505 --
Cash advanced on note receivable (400,000) --
Purchase of property and equipment (365,151) (297,426)
Net cash used in investing activities (758,646) (297,426)
Cash Flows From Financing Activities:
Proceeds from issuance of stock 1,493,818 --
Proceeds from exercise of options and warrants 436,296 --
Proceeds from employee stock plans 62,134 81,469
Proceeds from issuance of notes payable 278,290 95,548
Dividends paid (278,051) (247,156)
Payments on notes payable (333,042) (425,173)
Net cash provided by (used in) financing activities 1,659,443 (495,312)
Net increase (decrease) in cash and cash equivalents 242,866 5,228
Cash and cash equivalents at beginning of period 3,616,585 1,106,176
Cash and cash equivalents at end of period $ 3,859,451 $ 1,111,404
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 6,500 $ --
Cash paid for interest $ 50,771 $ 79,118
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Common Stock to pay accrued liabilities $ 633,725 $ 608,802
Dividends accrued on preferred stock $ 308,946 $ 499,280
Dividends paid with preferred stock $ -- $ 171,200
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000's)
Three Months Ended Six Months Ended
December 31, December 31,
2013 2012 2013 2012
Net Income (loss) ($550) ($64) ($1,597) $141
Adjusted EBITDA Reconciliation Adjustments:
Depreciation and amortization 241 230 469 460
Bad debt expense 60 -- 60 --
Interest, net (26) 34 (28) 77
Stock based compensation 855 290 1,231 525
Adjusted EBITDA $580 $490 $135 $1,203
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)
Three Months Ended Six Months Ended
December 31, December 31,
2013 2012 2013 2012
Net Income (loss) ($550) ($64) ($1,597) $141
Non-GAAP Net Income (Loss) Reconciliation Adjustments:
Stock based compensation 855 290 1,231 525
Acquisition related amortization 126 126 252 252
Non-GAAP Net Income $431 $352 ($114) $918
Preferred dividends (154) (289) (308) (499)
Non-GAAP Net Income to Common Shareholders $277 $63 ($422) $419
Weighted average shares, diluted 16,693,000 12,303,000 16,529,000 12,259,000
Non-GAAP EPS, diluted $0.02 $0.01 ($0.03) $0.03
Non-GAAP Free Cash Flow
(In $000's)
Three Months Ended Six Months Ended
December 31, December 31,
2013 2012 2013 2012
Net Cash Provided by Operating Activities ($48) $608 ($658) $879
Non-GAAP Free Cash Flow Reconciliation Adjustments:
Purchase of property and equipment (170) (17) (237) (66)
Non-GAAP Free Cash Flow ($218) $591 ($895) $813
Free cash flow includes net cash provided (used) by operating activities less replacement purchases of property and equipment. Capital expenditures related to long-term investments and new technology developments are omitted.
Non-GAAP Net Debt
(In $000's)
As of December 31,
2013 2012
Total Debt $2,008 $2,411
Less Total Cash 3,859 1,111
Non-GAAP Net Debt ($1,851) $1,300

CONTACT: Investor Relations Contact: Dave Mossberg Three Part Advisors, LLC 817-310-0051 Jeff Elliott 972-423-7070

Source:Park City Group, Inc.