Source: Park City Group, Inc.

Park City Group Reports Record Fiscal Year 2013 Results

ReposiTrak Food Safety Platform Emerging as Industry Standard

SALT LAKE CITY, Sept. 23, 2013 (GLOBE NEWSWIRE) -- Park City Group (NYSE MKT:PCYG), a cloud-based software as a service (SaaS) 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 year ended June 30, 2013.

Strategic and Financial highlights:

  • Record year-to-date revenue – Total revenue increased 12% for the fiscal year ended June 30, 2013. "We delivered record results during fiscal 2013. As expected, subscription revenue growth accelerated from prior years," said Randall K. Fields, Park City Group's Chairman and CEO.
  • Record annual profitability – During 2013, EBITDA increased 49% to $2.4 million, versus $1.6 million during the prior year. "Benefiting from the operating leverage in our business model, profitability accelerated at a faster pace than revenue growth," said Mr. Fields. 
  • Series A Preferred Stock Redemption – The Company completed the redemption of its Series A preferred stock, reducing preferred dividend payments by approximately $650,000 annually, or $0.04 per share.
  • Growth among national retailers exceeding expectations – "The pace at which national retailers are recognizing our valuation proposition is faster than we had anticipated. As a result, we have initiated test programs with three of the largest retailers in the world with more than 20,000 retail stores combined. Additionally, results from the retailer we announced in January have exceeded expectations and we are now exploring additional opportunities with this retailer," said Mr. Fields.
  • Significantly expanded sales leadership team – "We recently added several seasoned professionals to our sales leadership team. We are also expanding our account management staff to address significant growth opportunities with larger national retailers and our food safety initiative," said Mr. Fields.

Subscription revenue increased 15% for the fiscal year ended June 30, 2013. Record subscription revenue reflected growth in sales to new and existing customers during both periods, including ReposiTrak. Combined with growth in other revenue, total revenue increased 12% to a record $11.3 million for the fiscal year.

Total operating expenses during the fiscal year ended June 30, 2013 were $10.9 million, a decrease of $151,000 from the prior year. Operating expenses were relatively unchanged year over year as increased expenses for additional sales and marketing staff was offset by a reduction in general and administrative expenses. 

Net income for the fiscal year ended June 30, 2013 was $257,000, as compared to a net loss of ($859,000) during the prior year. Net loss applicable to common shareholders for the fiscal year was ($654,000), or ($0.05) per share, as compared to ($1.7 million), or ($0.14) per share during the prior year. Non-GAAP earnings per common shareholder for the fiscal year was $0.06, versus break even during the prior year. 

Total cash at June 30, 2013 was $3.6 million as compared to $1.1 million at June 30, 2012, and debt levels decreased by 19% to $2.2 million, versus $2.7 million at the same time last year. "We took actions to simplify and strengthen our balance sheet this past year, and as a result, we moved from a net debt position to a net cash position of $1.6 million," said Mr. Fields.

Highlights of ReposiTrak™: ReposiTrak, the Company's venture with Leavitt Partners, provides food and drug retailers and their suppliers with a cost-effective service to help protect their brands, and reduce regulatory and financial risk associated with the rapidly evolving Food Safety Modernization Act. "Based on the endorsements and adoptions by key players, ReposiTrak is rapidly becoming recognized as the industry standard," said Mr. Fields. "Our food and drug safety venture has enormous economic consequences for Park City Group. As a result, we are increasingly focused on its scaling and delivery."

  • ReposiTrak adopted by largest cooperative of independent food wholesalers –"ROFDA (Retailer Owned Food Distributors & Associates), which represents approximately 20% of the U.S. supermarket industry and nearly 50,000 suppliers, announced that it is adopting ReposiTrak," said Mr. Fields. "ReposiTrak is automating the processes to enable rapid scaling with several thousand suppliers already in its pipeline."  
  • ReposiTrak adopted by leading dietary supplement trade association – United Natural Products Alliance (UNPA) recently agreed to adopt ReposiTrak for use by its members. "Building on its strength in the food industry, ReposiTrak is aggressively moving to establish its service offering as the standard for the food supplement industry, as well as the drug industry," said Mr. Fields.
  • All Star Association adopts ReposiTrak - All Star Association, a leading buying association serving the dairy, food, beverage and packaging industries has agreed to adopt ReposiTrak for use by its more than 275 food and dairy members and 400 plants in 48 states.
  • Amended ReposiTrak™ Agreement – In recognition of the potential of ReposiTrak, and in consideration for providing certain credit arrangements to fund its growth, the Company received an option to acquire additional stock in the venture, increasing its potential ultimate ownership from 49% to 75%. 

The Company will host a conference call at 4:15 P.M. Eastern today, September 23, 2013, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 29185118. The conference call is also being webcast and is available via the investor relations section of the Company's website,

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 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. 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.

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.

Consolidated Condensed Balance Sheets
   June 30,
June 30,
Current assets:    
Cash  $ 3,616,585  $ 1,106,176
Receivables, net of allowance of $190,000 and $220,000 at June 30, 2013 and June 30, 2012, respectively 2,383,366 2,290,859
Prepaid expenses and other current assets 403,909 171,526
Total current assets 6,403,860 3,568,561
Property and equipment, net 671,959 559,140
Other assets:      
Deposits and other assets   14,866 20,697
Note receivable 1,622,863 --
Customer relationships 2,340,335 2,762,651
Goodwill   4,805,933 4,805,933
Capitalized software costs, net 73,082 219,248
Total other assets 8,857,079 7,808,529
Total assets  $15,932,898  $11,936,230
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable  $ 653,655  $ 550,846
Accrued liabilities   1,096,982 1,242,328
Deferred revenue 1,777,326 2,081,459
Capital lease obligations   -- 41,201
Lines of credit 1,200,000 1,200,000
Notes payable 551,421 798,704
Total current liabilities   5,279,384 5,914,538
Long-term liabilities:      
Notes payable, less current portion 310,642 711,571
Other long-term liabilities 101,500 --
Total liabilities 5,691,526 6,626,109
Commitments and contingencies -- --
Stockholders' equity:      
Series A Convertible Preferred Stock, $0.01 par value, 30,000,000 shares authorized; 0 and 685,671 shares issued and outstanding at June 30, 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 June 30, 2013 and June 30, 2012, respectively 4,119 4,119
Common Stock, $0.01 par value, 50,000,000 shares authorized; 16,128,530 and 12,087,431 shares issued and outstanding at June 30, 2013 and June 30, 2012, respectively  161,285  120,874
Additional paid-in capital  43,314,986  37,763,196
Accumulated deficit  (33,239,018)  (32,584,925)
Total stockholders' equity  10,241,372  5,310,121
Total liabilities and stockholders' equity  $15,932,898  $11,936,230
Consolidated Condensed Statements of Operations (unaudited)
    Three Months Ended
June 30,
Twelve Months Ended
June 30,
   2013 2012 2013 2012
Subscription  $2,107,047  $1,888,602  $8,025,025  $ 6,994,484
Other Revenue 792,810 553,896 3,293,549 3,104,063
Total revenues 2,899,857 2,442,498 11,318,574 10,098,547
Operating expenses:        
Cost of services and product support  1,169,148  1,127,970  4,490,438  4,581,765
Sales and marketing  963,584  697,491  3,054,361  2,640,292
General and administrative  612,120  664,193  2,474,169  2,949,108
Depreciation and amortization  218,282  229,096  901,407  900,094
Total operating expenses  2,963,134  2,718,750  10,920,375  11,071,259
Income (loss) from operations  (63,277)  (276,252)  398,199  (972,712)
Other income (expense):        
Other gains  --   263,277  --   319,272
Interest expense  (29,063)  (37,462)  (140,712)  (205,227)
Total other (expense) income  (29,063)  225,815  (140,712)  114,045
Income (loss) before income taxes  (92,340)  (50,437)  257,487  (858,667)
(Provision) benefit for income taxes:  --   --   --   -- 
 Net income (loss)  (92,340)  (50,437)  257,487  (858,667)
Dividends on preferred stock  (123,578)  (209,052)  (911,580)  (834,687)
Net income (loss) applicable to common shareholders  $ (215,918)  $ (259,489)  $ (654,093)  $(1,693,354)
Weighted average shares, basic and diluted 15,734,000 11,921,000 13,246,000 11,780,000
Basic and diluted loss per share  $ (0.01)  $ (0.02)  $ (0.05)  $ (0.14)
Consolidated Condensed Statements of Cash Flows (Unaudited)
For the Twelve Months Ended June 30,
   2013 2012
Cash Flows From Operating Activities:    
Net income (loss)  $ 257,487  $ (858,667)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 901,407 900,093
Bad debt expense 144,617 260,402
Stock compensation expense  843,645  911,094
Other gains  --   (319,272)
Decrease (increase) in:        
Receivables  (1,859,987)  491,488
Prepaids and other assets  (226,552)  97,621
Increase (decrease) in:        
Accounts payable  102,809  (184,073)
Accrued liabilities  (8,357)  132,679
Deferred revenue  (304,133)  418,227
Net cash (used in) provided by operating activities  (149,064)  866,616
Cash Flows From Investing Activities:        
Purchase of property and equipment  (445,744)  (238,760)
Net cash used in investing activities  (445,744)  (238,760)
Cash Flows From Financing Activities:        
Proceeds from issuance of stock  4,162,920  -- 
Proceeds from issuance of notes  176,797  310,231
Proceed from employee stock plans  156,741  141,827
Proceeds from exercise of options and warrants  --   496,393
Dividends paid  (503,311)  (494,312)
Payments on notes payable and capital leases  (866,210)  (2,594,048)
Net cash provided by (used in) financing activities  3,105,217  (2,139,909)
Net increase (decrease) in cash  2,510,409  (1,512,053)
Cash at beginning of period 1,106,176 2,618,229
Cash at end of period  $3,616,585  $1,106,176
Supplemental Disclosure of Cash Flow Information:      
Cash paid for income taxes $ -- $ --
Cash paid for interest  $ 142,491  $ 281,269
Supplemental Disclosure of Non-Cash Investing and Financing Activities:      
Common stock to pay accrued liabilities  $ 786,343  $ 846,765
Dividends accrued on preferred stock  $ 911,580  $ 834,687
Dividends paid with preferred stock  $ 501,060  $ 336,380
Conversion of accounts receivable into notes receivable  $1,622,863 $ --
Reconciliation of GAAP and Non-GAAP Financial Measures
Adjusted EBITDA
(In $000's)
Unaudited results of operations
  Three Months Ended
June 30,
Twelve Months Ended
June 30,
  2013 2012 2013 2012
Net Income (loss)  $ (92)  $ (50)  $ 257  $ (859)
Adjusted EBITDA Reconciliation Adjustments:        
Depreciation and amortization 318 229 901 900
Bad debt expense 64 86 145 260
Interest, net 29 37 141 204
Stock based compensation 219 262 996 1,073
One-time expenses (stock and cash) -- -- -- 60
Adjusted EBITDA $438 $564 $2,440 $1,638
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)
Unaudited results of operations
  Three Months Ended
June 30,
Twelve Months Ended
June 30,
  2013 2012 2013 2012
Net Income (loss)  $ (92)  $ (50)  $ 257  $ (859)
Non-GAAP Net Income (Loss) Reconciliation Adjustments:        
Stock based compensation 219 262 996 1,073
One-time expenses (stock and cash) -- -- -- 60
Acquisition related amortization 126 126 504 504
Non-GAAP Net Income $253 $338 $1,757 $778
Preferred dividends  (124)  (209)  (912)  (834)
Non-GAAP Net Income to Common Shareholders $129 $129  $ 845  $ (56)
Weighted average shares, diluted 15,734,000 11,921,000 13,246,000 11,780,000
Non-GAAP EPS, diluted $0.01 $0.01 $0.06 $(0.00)
Non-GAAP Free Cash Flow
(In $000's)
Unaudited results of operations
  Three Months Ended 
June 30,
Twelve Months Ended
June 30,
  2013 2012 2013 2012
Net Cash Provided by Operating Activities  $ (566)  $ 364  $ (149)  $ 1,008
Non-GAAP Free Cash Flow Reconciliation Adjustments:        
Purchase of property and equipment  (100)  (94)  (214)  (239)
Non-GAAP Free Cash Flow  $ (666)  $ 270  $ (363)  $ 769
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
(In $000's)
Unaudited results of operations
  As of June 30,    
  2013 2012    
Total Debt $2,062 $2,711    
Less Total Cash 3,617 1,106    
Non-GAAP Net Debt  $ (1,555)  $ 1,605