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Park City Group Reports Third Quarter Fiscal 2014 Results

Park City Group, Inc. logo

SALT LAKE CITY, May 12, 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 third quarter ended March 31, 2014. In addition, the Company announced significant progress with several key strategic initiatives.



Strategic and financial highlights include:

  • Record subscription revenue – Subscription revenue for the third fiscal quarter increased 24 percent year over year to a record $2.5 million. "Annual recurring revenue is accelerating, and we expect to show faster annual growth rates in each of the next several years," said Randall K. Fields, Park City Group's Chairman and CEO. "While growth is clearly accelerating, we continue to be obsessive about delivering our brand promise for customers to… sell more… stock less… and see everything."
  • Pace of ReposiTrak™ connections accelerates – During the quarter, ReposiTrak, the Company's food and drug safety venture with Leavitt Partners, enhanced its on-boarding process and has seen a much faster pace of connections and substantial additions to its rapidly-growing pipeline. "The pipeline of suppliers is expanding rapidly and has grown to several thousand," said Mr. Fields. "With endorsements from the leading supermarket trade association and one of the largest food wholesale trade associations, ReposiTrak is the standard for food safety tracking and tracing."
  • Continued progress with national retailers and suppliers – During the third quarter, the Company continued to make progress with national retailer and supplier customers. "Using our services, customers are experiencing sales lift and lower returns, while at the same time stocking lower levels of inventory. These very tangible benefits are driving increased activity with existing customers, raising our industry profile, and helping to generate trial activity among new national retailer and supplier customers," said Mr. Fields. "The additional activity in these accounts is an important component of our continued growth."

A Subscription Revenue Growth chart is available here: http://media.globenewswire.com/cache/14562/file/26382.pdf

Total operating expenses during the quarter ended March 31, 2014 were $3.5 million, an increase of $723,000 from the same quarter a year ago, and a decrease of $69,000 sequentially from the second quarter of fiscal 2014. The majority of the increase in operating expenses reflects increased sales, marketing and account management personnel. "We have increased the size of our investment in sales and marketing to meet both the sizable new business we have in hand, as well as opportunities for significant growth over the next several years," said Mr. Fields. "For the near term, we feel that current staffing levels are adequate to support our anticipated growth. With costs expected to be relatively flat over the next several quarters, a large portion of each incremental sales dollar should fall to the bottom line and allow for continued improvements in profit margin and cash flows."

Net loss applicable to common shareholders for the third quarter was ($561,000), or ($0.03) per share, as compared to ($79,000), or ($0.01) per share during the prior year period. Non-GAAP income to common shareholders for the third quarter was $0.00 per share, as compared to income per share of $0.02 during the same period last year.

Total cash at March 31, 2014 was $3.4 million, as compared to $3.6 million at June 30, 2013, and debt levels were $2.0 million, versus $2.1 million at June 30, 2013.

The Company will host a conference call at 4:15 P.M. Eastern today, May 12, 2014, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 35084024. 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 to be. Park City Group's services enable customers to "Sell More, Stock Less, and See Everything". More information is available at www.parkcitygroup.com

About ReposiTrak

ReposiTrak is a food and drug safety venture between Park City Group and Leavitt Partners that provides food retailers and suppliers with a robust solution to help protect their brands and remain in compliance with rapidly evolving regulations in the Food Safety Modernization Act. Powered by Park City Group (Nasdaq:PCYG) technology, ReposiTrak is an internet-based solution that enables all participants in the farm-to-shelf supply chain to easily manage tracking and traceability requirements as products move between trading partners in addition to maintaining business, insurance and regulatory documentation. ReposiTrak is endorsed by Food Marketing Institute (FMI), Retailer Owner Food Distributors and Associates (ROFDA), and United Natural Products Alliance (UNPA). 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.

– tables to follow –

PARK CITY GROUP, INC.
Consolidated Condensed Balance Sheets
Assets March 31, 2013 June 30, 2013
Current Assets:
Cash and cash equivalents $ 3,411,181 $ 3,616,585
Receivables, net of allowance of $70,000 and $190,000 at March 31, 2014 and June 30, 2013, respectively 3,018,850 2,383,366
Prepaid expense and other current assets 272,133 403,909
Total current assets 6,702,164 6,403,860
Property and equipment, net 814,649 671,959
Other assets:
Deposits and other assets 14,866 14,866
Note receivable 2,543,406 1,622,863
Customer relationships 2,023,598 2,340,335
Goodwill 4,805,933 4,805,933
Capitalized software costs, net -- 73,082
Total other assets 9,387,803 8,857,079
Total assets $ 16,904,616 $ 15,932,898
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 737,498 $ 653,655
Accrued liabilities 1,402,445 1,096,982
Deferred revenue 1,542,532 1,777,326
Line of credit 1,200,000 1,200,000
Note payable 246,039 551,421
Total current liabilities 5,128,514 5,279,384
Long-term liabilities:
Notes payable, less current portion 512,783 310,642
Other long-term liabilities 97,988 101,500
Total liabilities 5,739,285 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 March 31, 2014 and June 30, 2013 4,119 4,119
Common stock, $0.01 par value, 50,000,000 shares authorized; 16,910,009 and 16,128,530 issued and outstanding at March 31, 2014 and June 30, 2013, respectively 169,100 161,285
Additional paid-in capital 46,698,419 43,314,986
Accumulated deficit (35,706,307) (33,239,018)
Total stockholders' equity 11,165,331 10,241,372
Total liabilities and stockholders' equity (deficit) $ 16,904,616 $ 15,932,898
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2014 2013 2014 2013
Revenues:
Subscription $ 2,489,772 $ 2,007,821 $ 6,968,606 $ 5,917,978
Other Revenue 598,725 1,039,167 1,915,441 2,500,739
Total revenues 3,088,497 3,046,988 8,884,047 8,418,717
Operating expenses:
Cost of services and product support 1,336,818 1,141,643 3,792,364 3,321,290
Sales and marketing 1,073,200 747,120 3,442,675 2,090,777
General and administrative 905,225 692,548 3,032,842 1,862,049
Depreciation and amortization 211,661 222,602 679,963 683,125
Total operating expenses 3,526,904 2,803,913 10,947,844 7,957,241
Income (loss) from operations (438,407) 243,075 (2,063,797) 461,476
Other income (expense):
Interest income (expense) 31,987 (33,781) 59,927 (111,649)
Income (loss) before income taxes (406,420) 209,294 (2,003,870) 349,827
(Provision) benefit for income taxes: -- -- -- --
Net income (loss) (406,420) 209,294 (2,003,870) 349,827
Dividends on preferred stock (154,473) (288,721) (463,419) (788,002)
Net income (loss) applicable to common shareholders $ (560,893) $ (79,427) $ (2,467,289) $ (438,175)
Weighted average shares, basic and diluted 16,867,000 12,750,000 16,640,000 12,420,000
Basic and diluted loss per share $ (0.03) $ (0.01) $ (0.15) $ (0.04)
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Cash Flows (Unaudited)
For the 9 months Ended
March 31,
2014 2013
Cash Flows from Operating Activities:
Net (loss) income $ (2,003,870) $ 349,827
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 679,963 683,125
Stock issued for charitable contribution 96,900 --
Stock compensation expense 1,323,984 662,463
Bad debt expense 171,692 81,260
Decrease (increase) in:
Receivables (807,176) (923,078)
Prepaids and other assets 11,233 (165,809)
Increase (decrease) in:
Accounts payable 83,843 75,067
Accrued liabilities (33,801) 8,359
Deferred revenue (234,794) (510,735)
Net cash (used in) provided by operating activities (712,026) 260,479
Cash Flows From Investing Activities:
Cash from sale of property and equipment 6,505 --
Cash advanced on note receivable (800,000) --
Purchase of property and equipment (439,339) (345,375)
Net cash used in investing activities (1,232,834) (345,375)
Cash Flows From Financing Activities:
Proceeds from issuance of stock 1,493,818 4,054,921
Proceeds from exercise of options and warrants 627,529 --
Proceeds from employee stock plans 153,874 156,742
Proceeds from issuance of notes payable 338,287 176,797
Dividends paid (432,524) (370,734)
Payments on notes payable (441,528) (643,102)
Net cash provided by financing activities 1,739,456 3,374,624
Net (decrease) increase in cash and cash equivalents (205,404) 3,289,728
Cash and cash equivalents at beginning of period 3,616,585 1,106,176
Cash and cash equivalents at end of period $ 3,411,181 $ 4,395,904
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 6,634 $ --
Cash paid for interest $ 64,738 $ 112,806
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Common Stock to pay accrued liabilities $ 1,004,127 $ 846,513
Dividends accrued on preferred stock $ 463,419 $ 788,002
Dividends paid with preferred stock $ -- $ 501,060
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000's)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2014 2013 2014 2013
Net Income (loss) ($406) $209 ($2,004) $350
Adjusted EBITDA Reconciliation Adjustments:
Depreciation and amortization 212 223 680 683
Bad debt expense 112 81 172 81
Interest, net (32) 34 (60) 112
Stock based compensation 469 213 1,324 662
Adjusted EBITDA $355 $760 $112 $1,888
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2014 2013 2014 2013
Net Income (loss) ($406) $209 ($2,004) $350
Non-GAAP Net Income (Loss) Reconciliation Adjustments:
Stock based compensation 469 213 1,324 662
Acquisition related amortization 106 126 358 378
Non-GAAP Net Income $169 $548 ($322) $1,390
Preferred dividends (154) (289) (463) (788)
Non-GAAP Net Income to Common Shareholders $15 $259 ($785) $602
Weighted average shares, diluted 16,867,000 12,750,000 16,640,000 12,420,000
Non-GAAP EPS, diluted $0.00 $0.02 ($0.05) $0.05
Non-GAAP Free Cash Flow
(In $000's)
Three Months Ended
March 31,
Nine Months Ended
March 31,
2014 2013 2014 2013
Net Cash Provided by Operating Activities ($54) ($619) ($712) $260
Non-GAAP Free Cash Flow Reconciliation Adjustments:
Purchase of property and equipment (202) (48) (439) (345)
Non-GAAP Free Cash Flow ($256) ($898) ($1,151) ($85)

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. During 2Q13 the Company invested $232,000 in leasehold improvements for its new corporate headquarters located in Salt Lake City, UT, this amount is excluded from the Free Cash Flow calculation.

Non-GAAP Net Debt
(In $000's)
As of March 31,
2014 2013
Total Debt $1,959 $2,285
Less Total Cash 3,411 4,396
Non-GAAP Net Debt ($1,452) ($2,111)

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

Source:Park City Group, Inc.