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Park City Group Reports Record Third Quarter Fiscal 2013 Results

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Posts Record Quarterly and Year-To-Date Revenue and Earnings

Third Quarter Revenue Increased 21%, Adjusted EBITDA Increased 195%

SALT LAKE CITY, Utah, May 9, 2013 (GLOBE NEWSWIRE) -- Park City Group (NYSE MKT: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 across numerous financial metrics for its fiscal third quarter ended March 31, 2013. In addition, the Company made significant progress with several key strategic initiatives.

Strategic and Financial highlights included:

  • Record quarterly and year-to-date revenue – Total revenue growth accelerated to 21% for the third quarter, and 10% for the nine month period. "We continued to deliver record results during the quarter and our growth rate is accelerating. Subscription revenue growth is beginning to see the effect of some of our larger customers, as they move through the phases of implementation. The scale of these retailers, all of which are among the largest in the world, is an order of magnitude greater than most of our existing customers," said Randall K. Fields, Park City Group's Chairman and CEO.
  • Record quarterly and year-to-date profitability – Net income was a record for both the third quarter and the nine month periods ended March 31, 2013. During the third quarter, EBITDA nearly tripled to $799,000 from $271,000 during the same period last year. "Profitability accelerated at a faster pace than revenue growth, as each dollar of incremental sales produced substantially greater than our targeted 75%+ incremental profit contribution," said Mr. Fields.
  • Progress with large retailers. – The implementation of Park City Group's first drug store chain is progressing and contributed to revenue growth during the third quarter. The Company is currently in discussions to provide services to several other large retail chains.
  • Expanding opportunity with large retailer - The previously announced program to provide services to one of the largest retailers in the world is progressing. Park City Group and the retailer are exploring additional opportunities.
  • Established new industry solutions team – The Company established a "Customer First" Industry Solutions team to work collaboratively with retailers and their suppliers to drive measureable improvements in sales and inventory management objectives.
  • Redeemed Series A Preferred Stock – The Company recently completed the redemption of its Series A preferred stock, reducing preferred dividend payments by approximately $650,000 annually, or $0.04 per share.
  • Simplified and strengthened capital structure – Total cash at the end of March 31, 2013 increased 597% to $4.4 million, as compared to $631,000 at March 31, 2012, and debt levels decreased by 20% to $2.3 million, versus $2.8 million at the same time last year. As of March 31, the current ratio improved by 375% to 1.5 and stockholders' equity increased to $10.3 million versus $5.3 million at March 31, 2012.
  • ReposiTrak™ gaining significant industry momentum – The Company's food and drug safety collaboration with Leavitt Partners is receiving increased attention from large food wholesalers, retailers, and manufacturers. "Our food and drug safety initiative, ReposiTrak, has enormous economic consequences for Park City Group. ReposiTrak continues to gain traction and is well positioned to become the industry standard platform for tracking and tracing food and drugs throughout the supply chain. In addition to the direct benefits from subscription revenue and ultimate equity ownership, we expect ReposiTrak to provide access to a global base of food and drug retailers and suppliers. This greatly expands the size of our "hub and spoke" network and provides the opportunity to expose new connections to our other services," said Mr. Fields.

During the third fiscal quarter, subscription revenue increased 19% year over year to a record $2.0 million, reflecting growth in sales to new and existing customers. Combined with growth in other revenue, total revenue increased 21% to a record $3.0 million.

Total operating expenses during the quarter ended March 31, 2013 were $2.8 million, a decrease of 67,000 from the same quarter a year ago, and an increase of $117,000 sequentially from the second fiscal quarter. Net income for the third fiscal quarter ended March 31, 2013 was $209,000, or $0.02 per share, as compared to a net loss of ($353,000), or ($0.03) per share, during the prior year period. Net loss applicable to common shareholders for the third fiscal quarter was ($79,000), or ($0.01) per share, as compared to ($561,000), or ($0.05) per share during the prior year period. Non-GAAP earnings per common shareholder for the third quarter was $0.02, versus a loss per share of ($0.02) during the same period last year.

Cash

Total cash at the end of March 31, 2013 was $4.4 million as compared to $631,000 at March 31, 2012 and debt levels decreased by 20% to $2.3 million, versus $2.8 million at the same time last year. "We took actions to simplify and strengthen our balance sheet this past quarter, and as a result, we moved from a net debt position to a net cash position of $2.2 million. By redeeming our Series A preferred, we also reduced our preferred dividend payments by $650,000, or $0.04 per share, annually. That dividend has been a primary determinant of our historical GAAP loss, and will result in substantially improved GAAP performance," said Mr. Fields.

"We are gaining critical mass in the grocery store vertical by putting "customers first" and helping them to achieve our brand promise to sell more, stock less and see everything. This value proposition is clearly resonating with existing, as well as a rapidly growing list of new, large retailer and supplier customers. We are also leveraging our success with grocers, to enter into an additional retail vertical. As a result of this progress, our top and bottom lines are achieving record levels and our growth rate is accelerating. With the strong value proposition of our solutions combined with the recurring nature of subscription revenue, our business should deliver predictable and sustainable growth in revenue and earnings for the next several years," Mr. Fields concluded.

The Company will host a conference call at 4:15 P.M. Eastern today, May 9, 2013, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 59525804. 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 (NYSE MKT: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 services increase 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. Scan based trading provides retail trading partners with a distinct competitive advantage through scan sales that provides store level visibility and 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.

In 2012 Park City Group worked with Leavitt Partners, an internationally-known health care and food safety consulting firm to create ReposiTrak, Inc., which provides food retailers and suppliers with a robust solution that helps them protect their brands and remain in compliance with rapidly evolving regulations in the recently passed Food Safety Modernization Act. Powered by Park City Group, this solution, also called ReposiTrak™, is an internet-based technology, which enables all participants in the farm-to-table supply chain to easily manage tracking and traceability requirements as products move between trading partners.

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
March 31, June 30,
2013 2012
Assets (unaudited)
Current assets:
Cash $ 4,395,904 $ 1,106,176
Receivables, net of allowance of $165,000 and $220,000 at March 31, 2013 and June 30, 2012, respectively 3,132,677 2,290,859
Prepaid expenses and other current assets 325,953 171,526
Total current assets 7,854,534 3,568,561
Property and equipment, net 647,751 559,140
Other assets:
Deposits and other assets 32,079 20,697
Customer relationships 2,445,914 2,762,651
Goodwill 4,805,933 4,805,933
Capitalized software costs, net 109,624 219,248
Total other assets 7,393,550 7,808,529
Total assets $ 15,895,835 $ 11,936,230
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 625,913 $ 550,846
Accrued liabilities 1,037,747 1,242,328
Deferred revenue 1,570,724 2,081,459
Capital lease obligations -- 41,201
Lines of credit 1,200,000 1,200,000
Notes payable 665,162 798,704
Total current liabilities 5,099,546 5,914,538
Long-term liabilities:
Notes payable, less current portion 420,009 711,571
Other long-term liabilities 101,840 --
Total liabilities 5,621,395 6,626,109
Commitments and contingencies -- --
Stockholders' equity:
Series A Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; zero and 685,671 shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively -- 6,857
Series B Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively 4,119 4,119
Common Stock, $0.01 par value, 50,000,000 shares authorized; 13,778,085 and 12,087,431 shares issued and outstanding at March 31, 2013 and June 30, 2012, respectively 137,781 120,874
Additional paid-in capital 36,949,963 37,763,196
Series A Convertible Preferred redemption payable 6,313,677 --
Subscription receivable (108,000) --
Accumulated deficit (33,023,100) (32,584,925)
Total stockholders' equity 10,274,440 5,310,121
Total liabilities and stockholders' equity $ 15,895,835 $ 11,936,230
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2013 2012 2013 2012
Revenues:
Subscription $ 2,007,821 $ 1,682,751 $ 5,917,978 $ 5,105,882
Other Revenue 1,039,167 826,896 2,500,739 2,550,167
Total revenues 3,046,988 2,509,647 8,418,717 7,656,049
Operating expenses:
Cost of services and product support 1,141,643 1,198,421 3,321,290 3,453,795
Sales and marketing 747,120 712,256 2,090,777 1,942,801
General and administrative 692,548 734,523 1,862,049 2,284,915
Depreciation and amortization 222,602 226,198 683,125 670,998
Total operating expenses 2,803,913 2,871,398 7,957,241 8,352,509
Income (loss) from operations 243,075 (361,751) 461,476 (696,460)
Other income (expense):
Interest expense (33,781) (46,881) (111,649) (167,765)
Other gains/(losses) -- 55,995 -- 55,995
Income (loss) before income taxes 209,294 (352,637) 349,827 (808,230)
(Provision) benefit for income taxes -- -- -- --
Net income (loss) 209,294 (352,637) 349,827 (808,230)
Dividends on preferred stock (288,721) (208,415) (788,002) (625,635)
Net income (loss) applicable to common shareholders $ (79,427) $ (561,052) $ (438,175) $ (1,433,865)
Weighted average shares, basic and diluted 12,750,000 11,838,000 12,420,000 11,733,000
Basic and diluted loss per share $ (0.01) $ (0.05) $ (0.04) $ (0.12)
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Cash Flows (Unaudited)
For the Nine Months Ended March 31,
2013 2012
Cash Flows From Operating Activities:
Net income (loss) $ 349,827 $ (808,230)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 683,125 670,997
Bad debt expense 81,260 173,194
Stock compensation expense 777,200 811,171
Other gains -- (55,995)
(Increase) decrease in:
Receivables (923,078) 460,350
Prepaids and other assets (165,809) 53,435
(Decrease) increase in:
Accounts payable 75,067 (227,811)
Accrued liabilities 50,364 31,559
Deferred revenue (510,735) (465,163)
Net cash provided by operating activities 417,221 643,507
Cash Flows From Investing Activities:
Purchase of property and equipment (345,375) (145,058)
Net cash used in investing activities (345,375) (145,058)
Cash Flows From Financing Activities:
Proceeds from issuance of stock 4,054,921 --
Proceeds from exercise of options and warrants -- 14,748
Proceeds from issuance of notes 176,797 255,334
Dividends paid (370,734) (370,734)
Payments on notes payable and capital leases (643,102) (2,384,894)
Net cash used in financing activities 3,217,882 (2,485,546)
Net increase (decrease) in cash 3,289,728 (1,987,097)
Cash at beginning of period 1,106,176 2,618,229
Cash at end of period $ 4,395,904 $ 631,132
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes $ -- $ --
Cash paid for interest $ 112,806 $ 238,264
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Common stock to pay accrued liabilities $ 846,513 $ 645,938
Dividends accrued on preferred stock $ 788,002 $ 625,635
Dividends paid with preferred stock $ 501,060 $ 251,960
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000's)
Unaudited results of operations
Three Months Ended
March 31,
Nine Months Ended
March 31,
2013 2012 2013 2012
Net Income (loss) $209 ($353) $350 ($808)
Adjusted EBITDA Reconciliation Adjustments:
Depreciation and amortization 223 226 683 671
Bad debt expense 81 103 81 173
Interest, net 34 47 112 168
Stock based compensation 252 248 777 811
One-time expenses (stock and cash) -- -- -- 60
Adjusted EBITDA $799 $271 $2,003 $1,075
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)
Unaudited results of operations
Three Months Ended
March 31,
Nine Months Ended
March 31,
2013 2012 2013 2012
Net Income (loss) $209 ($353) $350 ($808)
Non-GAAP Net Income (Loss) Reconciliation Adjustments:
Stock based compensation 252 248 777 811
One-time expenses (stock and cash) -- -- -- 60
Acquisition related amortization 126 126 378 378
Non-GAAP Net Income $587 $21 $1,505 $441
Preferred dividends (289) (208) (788) (626)
Non-GAAP Net Income to Common Shareholders $298 ($187) $717 ($185)
Weighted average shares, diluted 12,750,000 11,838,000 12,420,000 11,733,000
Non-GAAP EPS, diluted $0.02 ($0.02) $0.06 ($0.02)
Non-GAAP Free Cash Flow
(In $000's)
Unaudited results of operations
Three Months Ended
March 31,
Nine Months Ended
March 31,
2013 2012 2013 2012
Net Cash Provided by Operating Activities ($462) $252 $417 $644
Non-GAAP Free Cash Flow Reconciliation Adjustments:
Purchase of property and equipment (48) (91) (113) (145)
Non-GAAP Free Cash Flow ($510) $161 $304 $499
Free cash flow includes net cash provided by operating activities less replacement purchases 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/ (Cash)
(In $000's)
Unaudited results of operations
As of March 31
2013 2012
Total Debt $2,285 $2,849
Less Total Cash 4,396 631
Non-GAAP Net Debt/ (Cash) $ (2,111) $2,218

CONTACT: Investor Relations Contact: Dave Mossberg Three Part Advisors, LLC 817-310-0051

Source:Park City Group, Inc.