Park City Group Reports Fourth Quarter And Full Year 2012 Results

Successfully Completes 3-year Transition From License to Software-as-a-Service Model

Reports Record Annual Subscription Revenue
  • 4Q12 record subscription revenue of $1.9 million, an 11% increase year over year
  • Fiscal 2012 record annual subscription revenue of $7.0 million, a 7% increase year over year
  • 4Q12 free cash flow of $270,000
  • Fiscal 2012 free cash flow of $769,000
  • 4Q12 GAAP EPS ($0.02), versus ($0.00) during 4Q11
  • Fiscal 2012 GAAP loss per share ($0.14), versus ($0.09) during Fiscal 2011
  • 4Q12 non-GAAP EPS of $0.01, versus EPS of $0.03 during 4Q11
  • Fiscal 2012 non-GAAP loss per share of ($0.00), versus EPS of $0.07 during Fiscal 2011
  • First major win in new retail vertical market
  • Food safety partnership begins major implementations with the first retailer and supplier

PARK CITY, Utah, Sept. 25, 2012 (GLOBE NEWSWIRE) -- Park City Group (NYSE Amex:PCYG), a Software-as-a-Service (SaaS) provider of unique supply chain solutions for retailers and their suppliers, today announced results for its fiscal fourth quarter and fiscal year ended June 30, 2012.

"2012 marked the successful completion of our three-year plan to transform the company from a license to a subscription revenue model. During the process we were successful in doubling the size of the business, shifting the mix of subscription revenue from 6% to 70% of total revenue, organically growing subscription revenue by nearly 40%, and at the same time reducing debt by nearly 70%," said Randall K. Fields, Park City Group's Chairman and CEO. "During that same period, we proved our ability to add new retailers "hubs" and suppliers "spokes" to our network, put in place the infrastructure to support rapid growth in connections between suppliers and retailers, and sell additional services to both suppliers and retailers in our network. With that process in our rear view mirror we are well positioned and will now accelerate the pace of growth."

2012 Accomplishments

New Retail Vertical Market – During 2012, the Company made an agreement with one of a leading drug store chains in the U.S., marking its first retail customer outside of the grocery industry. "This, along with several other initiatives, demonstrates the value proposition of our technology in other new markets," said Mr. Fields.

Growth of End-to-end Supply Chain Services – The Company announced that it is implementing additional supply chain management point solutions with a number of existing retail and supplier customers. "This year we have proven our ability to transition from a supplier of a diagnostic tool to a strategic partner offering end-to-end supply chain management solutions that can not only diagnose problems within customer supply chains, but also provide solutions to fix those problems," Mr. Fields said.

Food Safety – The Company announced that its Food & Drug Safety partnership with Leavitt Partners has begun its first two implementations of the ReposiTrak™ track and trace solution. "We believe that there is a very large addressable market for this solution and are excited about our initial engagements and the response we have received. We expect this partnership will also fuel the growth of our supply chain management solutions, as many of our launch customers for ReposiTrak™ have led to follow-on conversations about our other end-to-end solutions," said Mr. Fields.

Revenue

Subscription revenue during the fourth quarter increased 11% to $1.9 million, reflecting growth in sales to new and existing customers. Primarily related to the Company's strategic shift to a subscription revenue model, total revenue and other revenue declined 17%, and 56% respectively. "As anticipated, subscription revenue growth accelerated during the fourth quarter. In addition, we finalized agreements with large retail hubs that should allow for further acceleration in the coming quarters. With our transition to a subscription model complete, we believe license related revenue will stabilize at its current level of approximately 30% of sales," said Mr. Fields.

Subscription revenue from new and existing customers increased $1.2 million, or 18% from the prior year, and was offset by previously announced customer attrition, which included the non-renewal of a significant retail client and related connections in January 2012. As a result, subscription revenue increased 7% to $7.0 million during the fiscal year. "Accelerating growth of new and existing customers more than offset business that we believed was not in the best interest of the Company and elected not to pursue," said Edward L. Clissold, Park City Group's Chief Financial Officer. Other revenue for the fiscal year ended June 30, 2012 was $3.1 million, a decrease of 26% over the prior year. Total revenue for fiscal 2012 was $10.1 million, a 6% decrease from the prior year. The decline was principally due to the Company's strategic shift to a subscription revenue model.

Net (Loss) Income

Net loss available to common shareholders for the quarter ended June 30, 2012 was ($259,000), or ($0.02) per share, as compared to a net loss of ($49,000), or ($0.00) per share, during the prior year period. Non-GAAP earnings per share for the fourth quarter was $0.01 versus $0.03 during the same period last year.

For the fiscal year ended June 30, 2012, the net loss available to common shareholders was $1.7 million, or ($0.14) per share, compared to a net loss of $1.0 million, or ($0.09) per share, during the same period in fiscal 2011. Non-GAAP loss per share for fiscal 2012 was ($0.00) versus earnings per share of $0.07 during the same period last year.

Cash

During the quarter ended June 30, 2012, free cash flow was $270,000, compared to $524,000 during the same period last year. For fiscal 2012, free cash flow was $769,000 versus $1,194,000 reported during fiscal 2011. Total cash at the end of the fiscal 2012 was $1.1 million, and net debt declined by 29% to $1.6 million at June 30, 2012.

"The heavy lifting has been done to build an infrastructure capable of providing exceptional service to our customers. The fourth quarter marked an inflection point in the growth of our subscription revenue. With opportunities that we already have in place to provide base-level services to our existing retail/ supplier network, we can reasonably anticipate significant revenue growth for the next several years. Beyond that, we expect to layer on additional growth as we take advantage of opportunities with food and drug safety, new retail verticals, new services, and continue to expand the size of the network," Mr. Fields concluded.

The Company will host a conference call at 4:30 P.M. Eastern today, September 25, 2012, to discuss the results. Investors and interested parties may participate in the call by dialing (877) 675-3568 and referring to Conference ID: 33030391. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com . A toll free replay of the conference call will be available until October 2, 2012 by dialing (855) 859-2056 and entering conference ID: 33030391.

About Park City Group

Park City Group (NYSE Amex: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.

ReposiTrak™ provides food retailers and suppliers with a robust solution that will help them protect their brands and remain in compliance with rapidly evolving regulations in the recently passed Food Safety Modernization Act. An internet-based technology, ReposiTrak™, will enable 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, non-GAAP loss 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 operating 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. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
         
  For the Three Months Ended For the Years Ended
  June 30, June 30,
  2012 2011 2012 2011
Revenues:        
Subscriptions  $ 1,888,602  $ 1,703,664  $ 6,994,484  $ 6,548,578
Other Revenues  553,896  1,248,763  3,104,063  4,203,554
         
 Total Revenues  2,442,498  2,952,427  10,098,547   10,752,132
         
Operating expenses:        
Cost of Services and product support  1,127,970  1,133,592  4,581,765  4,028,222
Sales and marketing  697,491  693,722  2,640,292  2,742,061
General and administrative  664,193  672,922  2,949,108  3,053,818
Depreciation and amortization  229,096  211,179  900,094  786,790
         
 Total Operating Expenses  2,718,750  2,711,415  11,071,259  10,610,891
         
(Loss)/Income from Operations  ( 276,252 )  241,012  ( 972,712 )  141,241
         
Other Income (expense):        
Interest Expense   ( 37,462 )  ( 82,884 )  ( 205,227 )  ( 346,704 )
Other gains/losses  263,277    319,272  
         
(Loss)/Income before Income Taxes  ( 50,437 )  158,128  ( 858,667 )  ( 205,463 )
         
(Provision) benefit for income taxes        
         
 Net (Loss)/Income  ( 50,437 )  158,128  ( 858,667 )  ( 205,463 )
         
 Dividends on preferred stock  ( 209,052 )  ( 206,928 )   ( 834,687 )  ( 826,411 )
         
 Net (Loss)/Income applicable to common shareholders  $ ( 259,489 )  $ ( 48,800 )  $( 1,693,354 )  $( 1,031,874 )
         
Weighted average shares, basic 11,921,000 11,438,000 11,780,000 11,212,000
Weighted average shares, diluted 11,921,000 11,438,000 11,780,000 11,212,000
Basic and diluted (Loss)/income per share  ( 0.02 )  ( 0.00 )  ( 0.14 )  ( 0.09 )
     
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Balance Sheet
     
Assets June 30, 2012 June 30, 2011
     
 Current Assets:    
 Cash and cash equivalents $1,106,176 $2,618,229
 Receivables, net of allowance of $220,000 and $15,581 at June 30, 2012 and 2011, respectively 2,290,859 2,059,773
 Prepaid expense and other current assets 171,526 265,818
     
 Total current assets 3,568,561 4,943,820
     
 Property and equipment, net 559,140 651,992
     
 Other assets:    
 Deposits and other assets 20,697 24,026
 Customer relationships 2,762,651 3,184,967
 Goodwill 4,805,933 4,805,933
 Capitalized software costs, net 219,248 365,413
     
 Total other assets 7,808,529 8,380,339
     
 Total assets $11,936,230 $13,976,151
     
 Liabilities and Stockholders' Equity (Deficit)    
     
 Current liabilities:    
 Accounts payable $550,846 $790,914
 Accrued liabilities 1,242,328 1,162,775
 Deferred revenue 2,081,459 1,663,232
 Capital lease obligations 41,201 107,547
 Line of credit 1,200,000 1,200,000
 Note payable 798,704 2,414,853
     
 Total current liabilities 5,914,538 7,339,321
     
 Long-term liabilities:    
 Notes payable, less current portion 711,571 1,271,691
 Capital lease obligations, less current portion -- 41,202
     
 Total liabilities 6,626,109 8,652,214
     
 Commitments and contingencies    
     
 Stockholders' equity:    
 Series A Convertible Preferred stock, $0.01 par value, 30,000,000 shares authorized; 685,671 and 667,955 shares issued and outstanding at June 30, 2012 and 2011, respectively 6,857 6,680
Series B Convertible Preferred stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at June 30, 2012 and 2011 4,119 4,119
 Common stock, $0.01 par value, 50,000,000 shares authorized; 12,087,431 and 11,612,460 issued and outstanding at June 30, 2012 and June 30, 2011, respectively 120,874 116,125
 Additional paid-in capital 37,763,196 36,088,584
 Accumulated deficit (32,584,925) (30,891,571)
     
 Total stockholders' equity 5,310,121 5,323,937
     
 Total liabilities and stockholders' equity (deficit) $11,936,230 $13,976,151
     
     
PARK CITY GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
     
  For the Years Ended June 30,
Cash flows from operating activities: 2012 2011
Net (loss) income    
Adjustments to reconcile net (loss) income to net cash provided by operating activities: $(858,667) $(205,463)
Depreciation and amortization 900,093 786,790
Bad debt expense 260,402 57,096
Stock compensation expense 1,073,079 862,876
Stock issued for litigation settlement -- 375,000
Other gains (319,272) --
Decrease (increase) in:    
Trade receivables (491,488) (667,923)
Prepaids and other assets 97,621 (85,123)
Increase (decrease) in:    
Accounts payable (184,073) 216,067
Accrued liabilities 112,521 (191,376)
Deferred revenue 418,227 298,842
     
Net cash provided by operating activities 1,008,443 1,446,786
     
Cash Flows From Investing Activities:    
Purchase of property and equipment (238,760) (358,566)
Capitalization of software costs -- (197,051)
     
Net cash used in investing activities (238,760) (555,617)
     
Cash Flows From Financing Activities:    
Proceeds from exercise of options and warrants 496,393 332,510
Proceeds from issuance of note payable 310,231 559,472
Net increase in line of credit -- 600,000
Proceeds from issuance of stock -- 140,800
Dividends paid (494,312) (370,734)
Payments on notes payable and capital leases (2,594,048) (692,419)
     
Net cash provided by (used in) financing activities (2,281,736) 569,629
     
Net (decrease) increase in cash and cash equivalents (1,512,053) 1,460,798
     
Cash and cash equivalents at beginning of period 2,618,229 1,157,431
     
Cash and cash equivalents at end of period $1,106,176 $2,618,229
     
Supplemental Disclosure of Cash Flow Information    
Cash paid for income taxes $-- $--
Cash paid for interest $281,269 $302,238
     
Supplemental Disclosure of Non-Cash Investing and Financing Activities    
Common Stock to pay accrued liabilities $846,765 $923,890
Dividends accrued on preferred stock $834,687 $826,411
Dividends paid with preferred stock $336,380 $326,730
 
 
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
         
Adjusted EBITDA        
(In $000's)        
Audited results of operations        
         
  Three Months Ended June 30 Fiscal Year Ended June 30
  2012 2011 2012 2011
         
Net Income (loss) ($50) $158 ($859) ($205)
         
Adjusted EBITDA Reconciliation Adjustments:
Depreciation and amortization 229 211 900 787
Bad debt expense 86 43 260 57
Interest, net 37 83 204 347
Stock based compensation 262 210 1,073 863
One-time expenses (stock and cash) -- -- 60 450
         
Adjusted EBITDA $564 $705 $1,638 $2,299
         
         
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
         
Non-GAAP Net Income (Loss) to Common Shareholders and EPS
(In $000's, except per share)        
Audited results of operations        
         
  Three Months Ended June 30 Fiscal Year Ended June30
  2012 2011 2012 2011
         
Net Income (loss) ($50) $158 ($859) ($205)
         
Non-GAAP Net Income (Loss) Reconciliation Adjustments:        
Stock based compensation 262 210 1,073 863
One-time expenses (stock and cash) -- -- 60 450
Acquisition related amortization (1) 126 126 504 504
         
Non-GAAP Net Income $338 $494 $778 $1,612
         
Preferred dividends (209) (207) (834) (826)
         
Non-GAAP Net Income to Common Shareholders   $129   $287   ($56)   $786
         
Weighted average shares, diluted 11,921,000 11,438,000 11,780,000 11,212,000
 Non-GAAP EPS, diluted $0.01 $0.03 ($0.00) $0.07
         
1.  Acquisition related costs are certain costs that were incurred during the period that were not capitalized, including leases on vacant corporate facilities and data centers, travel, training and "run-out" of certain unused equipment leases and maintenance agreements.
         
PARK CITY GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP and Non-GAAP Financial Measures
         
Non-GAAP Free Cash Flow        
(In $000's)        
Audited results of operations        
         
  Three Months Ended June 30 Fiscal Year Ended June 30
  2012 2011 2012 2011
         
Net Cash Provided by Operating Activities $364 $536 $1,008 $1,447
         
Non-GAAP Free Cash Flow Reconciliation Adjustments:      
Purchase of property and equipment (94) (12) (239) (56)
Capitalized software costs -- -- -- (197)
         
Non-GAAP Free Cash Flow $270 $524 $769 $1,194
         
         
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 4Q11 the Company invested $303,000 in new technology development, which is excluded from the 4Q11 Free Cash Flow calculation.  
       
Non-GAAP Net Debt      
(In $000's)      
Audited results of operations      
       
  Fiscal Year Ended
  June 30
  2012 2011 2010
       
Total Debt $2,711 $4,887 $4,287
       
Less Total Cash $1,106 $2,618 $1,157
       
Non-GAAP Net Debt $1,605 $2,269 $3,130
       
CONTACT: Investor Relations Contact:         Dave Mossberg         Three Part Advisors, LLC         817-310-0051

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