Park City Group Reports Fiscal Year 2015 Results

Posts Record Fiscal 2015 Revenue Growth

Expects 6,000 New ReposiTrak Connections for Fiscal 2016

Expects Revenue Growth to Accelerate in Fiscal 2016

Expects Positive GAAP Net Income for Fiscal 2016

SALT LAKE CITY, Sept. 14, 2015 (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 results for its fiscal year-ended June 30, 2015.

Strategic and Financial Highlights:

  • Total revenue grew 13% for the fourth quarter and 14% for fiscal 2015 – “Led by an increase of supply chain services, we achieved record growth in fiscal 2015,” said Randall K. Fields, Park City Group’s Chairman and CEO. “We have completed the conversion from a licensing to a SaaS business model and as a result, going forward, total revenue will more closely mirror subscription revenue growth and more directly reflect the overall strength of our business.”
  • Supply chain subscription revenue grew 22% for the fourth quarter and 19% for fiscal 2015 – “Given the foundation that we have laid for a scalable business with a customer-centric focus, we are confident that revenue from supply chain management and ReposiTrak® food safety applications will continue to accelerate overall growth in fiscal 2016 and the next several years,” said Mr. Fields.
  • Positive free cash flow and successful secondary offering enhanced balance sheet in fiscal 2015 – At the end of fiscal 2015, the Company had $11.3 million in cash, up from $3.4 million at the end of the prior year. The company generated $1.7 million in free cash flow in fiscal 2015, and completed an offering of common stock in the fourth quarter which generated $6.7 million of net proceeds and broadened institutional ownership. “In fiscal 2015 we transitioned to positive free cash flow and strengthened our balance sheet, which should give customers greater confidence in our financial strength,” said Mr. Fields.
  • Continued acceleration in revenue growth, positive GAAP net income and significant free cash flow growth expected for fiscal 2016 – “With supply chain revenue growth expected to continue to accelerate and ReposiTrak expected to become a more meaningful contributor to overall revenue, top-line growth should accelerate in fiscal 2016. With Non-GAAP earnings and free cash flow turning positive during fiscal 2015, we should increasingly demonstrate the operating leverage of our business and expect to generate positive GAAP net income and significant free cash flow growth in fiscal 2016,” said Mr. Fields.

A Subscription Revenue Growth chart is available here: http://media.globenewswire.com/cache/14562/file/37168.pdf

Fiscal Fourth Quarter Results: For the fourth quarter ended June 30, 2015, the Company reported total revenue of $3.4 million, a 13% increase relative to the same quarter a year ago. Subscription revenue grew 19% year over year to $2.9 million. Total operating expenses during the fourth quarter were $5.9 million, an increase of 65% from the same quarter a year ago. Excluding a one-time, non-cash charge of $1.5 million, the year-over-year increase in quarterly operating expenses was 23%, primarily related to increases in sales and marketing expenses and general and administrative costs. Non-GAAP net income per share to common shareholders was $0.00 for the fourth quarter, as compared to a net loss per share of ($0.01) during the same period last year. GAAP net loss per share to common shareholders for the fourth quarter was ($0.14), as compared to ($0.04) in the prior year, primarily due to the aforementioned one-time non-cash charge.

Fiscal 2015 Results: For the fiscal year ended June 30, 2015, the Company reported total revenue of $13.6 million, a 14% increase relative to fiscal 2014. Subscription revenue grew 16% year over year to $10.9 million. Total operating expenses during fiscal 2015 were $17.7 million, an increase of 22% from the prior year. Excluding a one-time, non-cash charge of $1.5 million, total operating expenses were $16.2 million, an increase of 12% year over year. Non-GAAP net income per share to common shareholders for fiscal 2015 was $0.01 per share, as compared to a net loss per share of ($0.05) in fiscal 2014. GAAP net loss per share to common shareholders for fiscal 2015 was ($0.38) per share during fiscal 2015, as compared to ($0.19) in fiscal 2014, primarily due to one-time non-cash charges. Free cash flow improved by $2.2 million to $1.7 million during fiscal 2015, as compared to a negative ($551,000) in fiscal 2014. Adjusted EBITDA increased to $1.1 million in fiscal 2015 from $192,000 in fiscal 2014.

ReposiTrak® highlights: Highlights of Park City Group’s ReposiTrak subsidiary, the leading provider of Compliance Management and Track & Trace solutions for food safety, include:

  • Successfully completed acquisition of ReposiTrak – At the end of the fourth quarter, the Company completed the acquisition of 100% ownership of ReposiTrak. Beginning in fiscal 2016, revenue and earnings comparisons will reflect the combined company results on a consolidated basis. “Consolidating ownership under the same umbrella, has helped to further accelerate customer onboarding, and made it possible to identify and pursue cross selling opportunities with our supply chain services,” said Mr. Fields.
  • Food Safety Modernization Act (FSMA) finalization a catalyst for growth – ReposiTrak’s pipeline continues to grow as market participants look to comply with the new food safety regulations. “In each of the next four years, there will be increasing regulatory pressure applied to a greater percentage of market participants from large-to-small including the potential for criminal and civil liability. As an easy to use, cost effective solution endorsed by the leading trade associations, ReposiTrak is in an excellent position to help the food industry comply with these new regulations,” said Mr. Fields.
  • ReposiTrak expects to end fiscal 2016 with 8,500 supplier connections – “We added over 700 supplier connections in the fourth quarter, exceeded our goal and ended the fiscal year at approximately 2,500 connections. While net additions may vary from quarter-to-quarter, we expect the overall pace of connections to continue to accelerate during fiscal 2016 and we anticipate adding 6,000 new connections for the year,” said Mr. Fields.
  • Expanding addressable market with pilots in food service and pharma – ReposiTrak intends to begin pilot programs with food service and pharmaceutical market participants during fiscal 2016. “While it is too early to say for sure, these pilot programs could significantly expand the addressable market for ReposiTrak’s Compliance Management and Track & Trace solutions,” said Mr. Fields.

Specific disclosure relating to the acquisition of ReposiTrak, including management’s analysis of results from operations and financial condition, are contained in the Company’s annual report on Form 10-K for the year ended June 30, 2015 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company’s Form 10-K and other reports, including the risk factors contained in such Form 10-K.

The Company will host a conference call at 4:15 P.M. Eastern today, September 14, 2015 to discuss the results. Investors and interested parties may participate in the call by dialing (888) 427-9376 and referring to Conference ID: 2575822. 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 (PCYG) is a Software-as-a-Service (“SaaS”) provider that brings unique visibility to the consumer goods supply chain, delivering actionable information to ensure products are available when and where consumers demand them, helping retailers and suppliers to ‘Sell More, Stock Less, and See Everything’. Park City Group’s technology also assists all participants in the food and drug supply chains to comply with food and drug safety regulations through the Company’s ReposiTrak subsidiary. More information is available at www.parkcitygroup.com and www.repositrak.com.

Non-GAAP Financial Measures and Pro-forma Results

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
 
  June 30, June 30,
  2015 2014
Assets    
Current assets:    
Cash and cash equivalents $ 11,325,572 $ 3,352,559
Receivables, net of allowance of $94,000 and $70,000 at June 30, 2015 and  2014, respectively 1,640,591 2,857,983
Prepaid expenses and other current assets 463,427 250,855
     
Total current assets 13,429,590 6,461,397
     
Property and equipment, net 764,442 740,753
     
Other assets:    
Deposits and other assets 14,866 14,866
Note receivable 2,996,664
Customer relationships 2,006,951 1,918,019
Goodwill 20,190,935 4,805,933
     
Total other assets 22,212,752 9,735,482
     
Total assets $ 36,406,784 $ 16,937,632
     
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $ 817,119 $ 738,289
Accrued liabilities 2,512,111 1,801,355
Deferred revenue 2,331,920 1,840,811
Line of credit 2,500,000 1,200,000
Notes payable 227,301 226,900
     
Total current liabilities 8,397,451 5,807,355
     
Long-term liabilities:    
Notes payable, less current portion 349,192 422,248
Other long-term liabilities 75,518 88,948 
     
Total liabilities 8,822,161 6,318,551
     
Commitments and contingencies    
     
Stockholders’ equity:    
     
Preferred Stock, $0.01 par value, 30,000,000 shares authorized;    
Series B Preferred Stock, 625,375 and 411,927 shares issued and outstanding at June 30, 2015 and 2014, respectively. 6,254 4,119
Series B-1 Preferred Stock, 74,200 and 0 shares issued and outstanding at June 30, 2015 and 2014, respectively. 742
Common Stock, $0.01 par value, 50,000,000 shares authorized; 18,875,586 and 16,928,025 shares issued and outstanding at June 30, 2015 and 2014, respectively 188,759 169,280
Additional paid-in capital 70,296,496 46,792,736
Accumulated deficit (42,907,628) (36,347,054)
     
Total stockholders’ equity 27,584,623 10,619,081
     
Total liabilities and stockholders’ equity $ 36,406,784 $ 16,937,632
 
See accompanying notes to consolidated condensed financial statements.
 
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
 
  Three Months Ended Twelve Months Ended
   June 30, June 30
  2015 2014 2015 2014
Revenues $ 3,444,259 $ 3,044,369 $ 13,648,715 $ 11,928,416
         
Operating expenses:        
Cost of services and product support 1,307,115 1,295,609 5,256,251 5,087,973
Sales and marketing 1,521,965 1,298,899 5,941,349 4,741,574
General and administrative 1,370,988 779,423 4,279,641 3,812,265
Depreciation and amortization 203,365 199,366 768,165 879,329
Impairment of intangibles 1,495,703 1,495,703
         
Total operating expenses 5,899,136 3,573,297 17,741,109 14,521,141
         
Loss from operations (2,454,877) (528,928) (4,092,394) (2,592,725)
         
Other income:        
Interest income, net 71,897 42,653 242,621 102,580
         
Loss before income taxes (2,382,980) (486,275) (3,849,773) (2,490,145)
         
(Provision) benefit for income taxes:
 Net loss (2,382,980) (486,275) (3,849,773) (2,490,145)
         
Dividends on preferred stock (124,176) (154,472) (568,821) (617,891)
Series B restructure (2,141,980)
Net loss applicable to common shareholders $ (2,507,156) $ (640,747) $ (6,560,574) $ (3,108,036)
         
Weighted average shares, basic and diluted 17,890,000 16,710,000 17,375,000 16,710,000
Basic and diluted loss per share $ (0.14) $ (0.04) $ (0.38) $ (0.19)
 
See accompanying notes to consolidated condensed financial statements.
 
 
PARK CITY GROUP, INC.
Consolidated Condensed Statements of Cash Flows
 
  Twelve Months Ended
June 30,
  2015 2014
Cash Flows From Operating Activities:    
Net loss $ (3,849,773) $ (2,490,145)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization 768,165 879,329
Impairment of intangibles 1,495,703  
Charitable non-cash donations 157,950 96,900
Stock compensation expense 2,760,329 1,719,375
Bad debt expense 186,780 186,740
(Increase) decrease in:    
Receivables 710,302 (661,357)
Prepaids and other assets (501,957) (20,747)
(Decrease) increase in:    
Accounts payable (49,296) 84,634
Accrued liabilities 136,517 49,252
Deferred revenue (107,123) 63,485
     
Net cash provided by (used in) operating activities 1,707,597 (92,534)
     
Cash Flows From Investing Activities:    
Payments received on notes receivable 300,000
Net cash received in acquisition 22,119
Cash from sales of property and equipment 6,505
Purchase of property and equipment (369,536) (459,230)
Cash advanced on notes receivable (2,559,460) (1,200,000)
Net cash used in investing activities (2,606,877) (1,652,725)
     
Cash Flows From Financing Activities:    
Proceeds from issuance of stock 7,606,384 1,493,818
Net increase in lines of credit 1,300,000
Proceeds from employee stock plans 203,211 153,875
Proceeds from issuance of notes payable 172,795 338,287
Proceeds from exercise of options and warrants 633,454
Series B preferred redemption (7,500)
Dividends paid (157,147) (586,999)
Payments on notes payable (245,450) (551,202)
     
Net cash provided by financing activities 8,872,293 1,481,233
     
Net increase (decrease) in cash and cash equivalents 7,973,013 (264,026)
     
Cash and cash equivalents at beginning of period 3,352,559 3,616,585
     
Cash and cash equivalents at end of period $ 11,325,572 $ 3,352,559
     
Supplemental Disclosure of Cash Flow Information:    
Cash paid for income taxes $ — $ 6,634
Cash paid for interest $ 80,534 $ 75,343
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities:    
Preferred stock to pay accrued liabilities $ 300,000 $ —
Common stock to pay accrued liabilities $ 1,860,192 $ 1,107,698
Dividends accrued on preferred stock $ 568,821 $ 617,891
Dividends paid with preferred stock $ 442,002 $ —
Series B Restructure $ 2,141,980 $ —
 
See accompanying notes to consolidated condensed financial statements.
 
 
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
 
Adjusted EBITDA    
(In $000’s)    
  Three Months Ended
June 30,
Twelve Months Ended
June 30,
  2015 2014 2015 2014
         
Net Loss ($2,383) ($486) ($3,850) ($2,490)
         
Adjusted EBITDA Reconciliation Adjustments:        
Depreciation and amortization 203 199 768 879
Bad debt expense 62 15 187 187
Interest, net (72) (43) (243) (103)
Stock based compensation 964 395 2,760 1,719
Impairment of intangibles 1,496 1,496
         
 Adjusted EBITDA $270 $80 $1,118 $192
         
 
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000’s, except per share)
 
  Three Months Ended
June 30,
Twelve Months Ended
June 30,
  2015 2014 2015 2014
         
Net loss applicable to common shareholders ($2,507) ($641) ($6,561) ($3,108)
         
Non-GAAP Net Loss Reconciliation Adjustments:        
Stock based compensation 964 395 2,760 1,719
Acquisition related amortization 1,601 106 1,918 463
Restructure of preferred stock 2,142
         
Non-GAAP Net Income to Common Shareholders $58 ($140) $259 ($926)
         
Weighted average shares, diluted 17,890,000 16,710,000 17,375,000 16,710,000
Non-GAAP EPS, diluted $0.00 ($0.01) $0.01 ($0.05)
 
 
Non-GAAP Free Cash Flow
(In $000’s)
  Three Months Ended
 June 30,
Twelve Months Ended
June 30,
  2015 2014 2015 2014
         
Net Cash Provided by Operating Activities $1,199 $619 $1,708 ($92)
         
Non-GAAP Free Cash Flow Reconciliation Adjustments:        
Purchase of property and equipment (7) (20) (28) (459)
         
Non-GAAP Free Cash Flow $1,192 $599 $1,680 ($551)
         
 
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. 
     
     
  For the Three Months Ended For the twelve Months
Ended June 30,
  September 30,
2014
December 31,
2014
March 31,
2015
June 30,
2015
2015  2014
Revenue 2,960,230  2,980,095  2,823,376  2,808,094 11,571,795  9,777,431
Loss from Operations (913,569)   (1,243,254) (1,349,707)  (3,355,955)  (6,862,485) (5,232,552)
Net Loss (916,417) (1,270,240)   (1,365,128) (3,374,962) (6,926,747) (5,303,773)
Net Loss Applicable to Common Shareholders (1,070,890)  (1,424,713)  (3,642,807) (3,499,138) (9,637,548)  (5,921,664)
Basic and Diluted EPS   (0.06)  (0.08)   (0.20)   (0.19)   (0.53)  (0.34)
CONTACT: Investor Relations Contact:
         
         Jeff Elliott
         Three Part Advisors, LLC
         972-423-7070
         
         Dave Mossberg
         Three Part Advisors, LLC
         817-310-0051

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