Park City Group Reports Financial Results for the Fiscal First Quarter of 2020

ReposiTrak Compliance and Supply Chain Drives Recurring Revenue Company adds Two New MarketPlace Buyers

SALT LAKE CITY--(BUSINESS WIRE)--Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., which operates a B2B ecommerce, compliance, and supply chain platform that partners with retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies, announced financial results for the first fiscal quarter ended September 30, 2019.

First Quarter Financial and Recent Business Highlights:

• Operating cash flow of $713,000. Cash totaled $18.3 million
• Total revenue increased 3% sequentially and decreased 19% year-over-year due to lower non-recurring revenue
• Recurring revenue increased 4% and reached 85% of total revenue
• Operating expense declined 5% year-over-year
• Net income of $178,000
• Compliance facility connections reached 90,744, up 47% year-over-year
• Total Tier 2 connections increased 184% year-over-year and up 48% sequentially
• MarketPlace added two net new buyers
• Repurchased 79,955 shares at an average price of $6.47 for a total of nearly $518,000

“The goal of driving our network size from 20,000-plus to 100,000 companies is accelerating,” said Randall K. Fields, Chairman and CEO of Park City Group. “We ended the quarter with a total network of nearly 340,000 connections. Increasing the penetration in our network represents an eight-figure revenue opportunity. Driving the network scale, making it easier for customers to buy, provides cross selling opportunities for more services, at a competitive price, and drives results.”

“We remain focused on accelerating our recurring revenue growth with a three-pronged strategy,” Mr. Fields stated. “First, we grow compliance revenue by adding more Tier 2 hubs. Second, we accelerate Supply Chain revenue by focusing on the industry’s number one problem: Out of Stocks. Third, we grow MarketPlace by adding additional buyers. All of this is happening now, and we believe that it will drive year-over-year revenue growth for fiscal 2020.”

“Our platform continues to attract net new participants every month,” Mr. Fields added. “We remain laser-focused on growing recurring revenue and further penetrating our existing customer base. Notably, Tier 2 recurring revenue grew for the quarter 8% year-over-year, and we exited the quarter on a run rate that was 35% higher than the comparable period last year.”

Mr. Fields concluded, “I am particularly encouraged with the response to our new Out of Stock Management Solution (OOS). We delivered an average reduction of 39% in out-of-stocks in less than three months for nine different retailers across more than 25,000 store-SKUs and more than 12,175 stores. Eliminating out-of-stocks remains a critical challenge for food retailers as consumers turn to online retailers when their local store is out of a sought-after item. Previously, retailers had no viable solution to address this challenge. Our OOS is the industry’s first solution to address Direct Store Delivery out-of-stocks, enables retailers to keep customers and increase revenues. It also serves as a differentiator, helping us secure recurring revenue. When combined with our MarketPlace solution, we are increasingly providing innovative solutions to address pressing challenges for all retailers. The growth of our network underscores the progress we are making as we continue to minimize one-time revenue, and focus on our accelerating recurring revenue. As we accomplish this objective, our top line will begin to grow rapidly.”

First Quarter Financial Results:

First Fiscal Quarter 2020 Results (three months ended September 30, 2019 vs. three months ended September 30, 2018):

Total revenue declined 19% to $4.8 million as compared to $5.9 due to lower non-recurring revenue in the current period. Total operating expense was $4.7 million, a 5% decrease from $4.9 million. GAAP net income was $178,000, or 4% of revenue, versus $966,000, or 16% of revenue, and GAAP net income to common shareholders was $32,000, or $0.00 per diluted share, compared to $820,000, or $0.04 per diluted share.

Conference Call:

The Company will host a conference call at 4:15 p.m. ET today, November 7, 2019 to discuss the Company's results. Investors and interested parties may participate in the call by dialing 1-866-952-8559 (toll-free) or 1-785-424-1877 (international) and referring Conference ID: PARKCITY. The conference call is also being webcast and is available via the investor relations section of the Company's website, www.parkcitygroup.com. A replay of the conference call will be available from 7:15 ET today until 11:59 p.m. ET on December 7, 2019. The Replay can be accessed by calling 1-844-512-2921 (toll-free) or 1-412-317-6671 (international). Please enter pin number 136961to access the replay.

About Park City Group:

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., a compliance, supply chain, and e-commerce platform that enables retailers, wholesalers, and their suppliers, to accelerate sales, control risk, and improve supply chain efficiencies. More information is available at www.parkcitygroup.com and www.repositrak.com.

Specific disclosure relating to Park City Group, 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 fiscal year ended September 30, 2019 and other reports filed with the Securities and Exchange Commission. Investors are encouraged to read and consider such disclosure and analysis contained in the Company's Form 10-K and other reports, including the risk factors contained in the Form 10-K.

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 Statements of Operations (Unaudited)
		Three Months Ended
FY ENDS June		9/30/19	9/30/18	% Chg.
Total Revenues		$     4,800,084	$     5,941,994	(19%)
Operating Expenses
	Cost of Services and Product Support	(1,828,114)	(1,728,526)	6%
	Sales and Marketing	(1,414,863)	(1,908,024)	(26%)
	General and Administrative	(1,222,212)	(1,143,311)	7%
	Depreciation and Amortization	(193,677)	(145,375)	33%
	Total Operating Expenses	(4,658,866)	(4,925,236)	(5%)
Operating Income		$        141,218	$     1,016,758	(86%)
	Interest Income	82,731	35,124	136%
	Interest (Expense)	(20,598)	(10,473)	97%
	Gain (loss) Investment	-	-
	Income Before Taxes	203,351	1,041,409	(80%)
	Provision for Taxes	(25,000)	(75,000)	(67%)
Net Income		$        178,351	$        966,409	(82%)
	Dividends on Preferred Stock	(146,611)	(146,611)	-
Net Income to Common Shareholders		$          31,740	$        819,798	(96%)
GAAP EPS, Basic		$              0.00	$              0.04	(96%)
GAAP EPS, Diluted		$              0.00	$              0.04	(96%)
Weighted Average Shares, Basic		19,811,000	19,786,000
Weighted Average Shares, Diluted		20,122,000	20,363,000

PARK CITY GROUP, INC. Consolidated Condensed Balance Sheets (Unaudited)
Assets	September 30, 2019			June 30, 2019
Current assets
Cash	$	18,295,443		$	18,609,423
Receivables, net of allowance for doubtful accounts of $272,345 and $145,825 at September 30, 2019 and June 30, 2019, respectively		4,073,777			3,878,658
Contract asset – unbilled current portion		3,024,821			3,023,694
Prepaid expense and other current assets		472,068			1,037,099
Total current assets		25,866,109			26,548,874
Property and equipment, net		3,189,651			2,972,257
Other assets:
Deposits, and other assets		22,414			17,146
Contract asset – unbilled long-term portion		1,488,310			1,659,110
Operating lease-right-of-use asset		842,689			-
Customer relationships		755,550			788,400
Goodwill		20,883,886			20,883,886
Capitalized software costs, net		46,349			70,864
Total other assets		24,039,198			23,419,406
Total Assets	$	53,094,958		$	52,940,537
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	441,096		$	530,294
Accrued liabilities		1,179,289			1,399,368
Contract liability - deferred revenue		1,955,425			1,917,787
Lines of credit		4,660,000			4,660,000
Operating lease liability - current		82,517			-
Current portion of notes payable		298,866			295,168
Total current liabilities		8,617,193			8,802,617
Long-term liabilities
Operating lease liability – less current portion		760,172			-
Notes payable, less current portion		844,636			920,754
Total liabilities		10,222,001			9,723,371
Commitments and contingencies
Stockholders’ equity:
Preferred Stock; $0.01 par value, 30,000,000 shares authorized;
Series B Preferred, 700,000 shares authorized; 625,375 shares issued and outstanding at September 30, 2019 and June 30, 2019;		6,254			6,254
Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at September 30, 2019 and June 30, 2019, respectively		2,124			2,124
Common Stock, $0.01 par value, 50,000,000 shares authorized; 19,741,234 and 19,793,372 issued and outstanding at September 30, 2019 and June 30, 2019, respectively		197,415			197,936
Additional paid-in capital		76,533,138			76,908,566
Accumulated deficit		(33,865,974	)		(33,897,714	)
Total stockholders’ equity		42,872,957			43,217,166
Total liabilities and stockholders’ equity	$	53,094,958		$	52,940,537

PARK CITY GROUP, INC. Consolidated Condensed Statements of Cash Flows (Unaudited)
	Three Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income	$	178,351		$	966,409
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		193,677			145,376
Stock compensation expense		119,567			95,688
Bad debt expense		125,000			100,000
(Increase) decrease in:
Accounts receivables		(321,246	)		1,730,526
Long-term receivables, prepaid and other assets		730,563			(1,326,272	)
Right-of-use asset		(842,689	)		-
(Decrease) increase in:
Accounts payable		(89,198	)		(550,914	)
Accrued liabilities		(261,758	)		666,002
Lease liabilities		842,689			-
Deferred revenue		37,638			(220,023	)
Net cash provided by operating activities		712,594			1,606,792
Cash flows from investing activities:
Purchase of property and equipment		(353,706	)		(1,492	)
Net cash used in investing activities		(353,706	)		(1,492	)
Cash flows financing activities:
Net increase in lines of credit		-			1,430,000
Common Stock buyback/retirement		(517,360	)		-
Proceeds from employee stock plans		63,523			-
Dividends paid		(146,611	)		-
Payments on notes payable and capital leases		(72,420	)		(1,476,543	)
Net cash used in financing activities		(672,868	)		(46,543	)
Net (decrease) increase in cash and cash equivalents		(313,980	)		1,558,757
Cash and cash equivalents at beginning of period		18,609,423			14,892,439
Cash and cash equivalents at end of period	$	18,295,443		$	16,451,196
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	79,073		$	98,039
Cash paid for interest	$	20,598		$	8,274
Cash paid for operating leases	$	30,600		$	-
Supplemental disclosure of non-cash investing and financing activities:
Common Stock to pay accrued liabilities	$	77,888		$	134,546
Dividends accrued on preferred stock	$	146,611		$	146,611