Park City Group Reports First Fiscal Quarter 2019 Results

Earnings Accelerated as Revenues Grew 26% and Net Income Increased
by 192%

Record Operating Cash Flows of $1.6 Million Drove Total Cash to
Record Levels

Customer Focus Drove Strong Growth in Connections and Increased
Cross Selling

SALT LAKE CITY–(BUSINESS WIRE)–Park City Group, Inc. (NASDAQ:PCYG), the parent company of ReposiTrak,
Inc., which operates a B2B e-commerce, 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, 2018.

First Fiscal Quarter Financial and Recent Business Highlights:

  • Revenue increased 26% to $5.9 million from $4.7 million in the
    same period last year
  • Net income nearly tripled to $966,000 from $331,000 in the same period
    last year
  • Record operating cash flows of $1.6 million drove total cash to record
    high of $16.5 million
  • Customer focus drove strong connection growth, low churn, and
    increased cross selling
  • Compliance connections reached 70,000 for nearly 300,000 connections
    across all applications

“We began fiscal 2019 with strong momentum and continued growth across
all areas of our business,” said Randall K. Fields, Chairman and Chief
Executive Officer of Park City Group. “Total revenues increased 26% in
the first quarter, and we delivered a near tripling of net income, and
record operating cash flows. Results for the quarter were driven by our
Compliance business, with growth of both Tier 1 and Tier 2 connections,
continued growth in high quality Supply Chain subscription revenue, and
a large year-over-year increase in revenues from our MarketPlace
initiative.”

Mr. Fields added. “With the convergence of our Supply Chain offering
into ReposiTrack and the launch of MarketPlace we have created a single
platform to address our customers’ needs across every aspect of the
supply chain. This is allowing us to better cross-sell our solutions
within our network which positions us to more effectively drive growth
and accelerate profitability. As a result, we are winning larger
mandates from our retail and wholesale HUBs for both our Compliance and
Supply Chain solutions and driving sales of our applications deeper into
their supplier bases, most notably with our Tier 2 Supplier HUB growth
initiative.”

“With MarketPlace up and running, and revenues accelerating, we rotated
our focus back to Compliance,” Mr. Fields added. “As a result, we
generated strong results from Compliance activities during the first
quarter. We saw near record growth in Tier-1 Compliance connections,
while our Success Team’s increased focus on signing up Tier-2 Supplier
Hubs accelerated the pace of this activity from prior quarters. This
gives us even greater confidence that this offering will be a catalyst
for growth beginning in the second half of this year as we leverage our
relationship with the thousands of suppliers in our Compliance network.”

“Our Supply Chain business continues to deliver solid revenue growth,”
said Mr. Fields. “This is increasingly being driven by larger mandates
from retail and wholesale HUBs seeking to drive our applications deeper
into their supply chains as they see the benefit from our solutions to
their competitive capabilities. However, overall results are also
clearly underpinned by low churn of both Supply Chain and Compliance
customers due to our relentless pursuit of customer satisfaction, with
overall churn less than 2% of total revenues in the past year.”

“Last, but certainly not least, we continue to be encouraged by the
results we are achieving from MarketPlace with one of the largest
retailers in the country,” concluded Mr. Fields. “During the first
quarter, we expanded our program with this customer to a second
category, improved our execution capabilities, and are working to
onboard new retail HUB buyers to the platform. As expected, we
experienced some seasonality during the first quarter, which will likely
continue into our second quarter. Nevertheless, year-over-year growth
remains significant and we remain confident we will add at least two
more buyer HUBs to MarketPlace in fiscal 2019.”

Financial Results Summary:

First Fiscal Quarter Results: Total revenue increased 26% to $5.9
million for the three months ended September 30, 2018, as compared to
$4.7 million during the same period a year ago. Total operating expenses
were $4.9 million, a 15% increase from $4.3 million a year ago, as the
Company begins to leverage investments made in increasing productivity.
GAAP net income was $996,000, or 16.3% of revenue, versus $331,000, or
7.0% of revenue, a year ago, and GAAP net income to common shareholders
was $820,000, or $0.04 per diluted share, compared to $214,000, or $0.01
per diluted share, a year ago.

Conference Call:

The Company will host a conference call at 4:30 P.M. ET today, November
8, 2018 to discuss the Company’s results. Investors and interested
parties may participate in the call by dialing 877-830-2597 or
785-424-1744 (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 7:30 ET today
until 11:59 p.m. ET on December 8, 2018. The Replay can be accessed by
calling 844-512-2921 (toll-free) or 412-317-6671 (international). Please
enter pin number 132193 to 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 partners
with 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
quarter ended September 30, 2018 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.

— Financial Tables Follow —

         
Park City Group, Inc.
INCOME STATEMENT
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17 % Chg.
 
Total Revenues $ 5,941,994 $ 4,712,165 26 %
 
Operating Expenses
Cost of Services and Product Support (1,728,526 ) (1,418,013 ) 22 %
Sales and Marketing (1,908,024 ) (1,585,940 ) 20 %
General and Administrative (1,143,311 ) (1,135,770 ) 1 %
Depreciation and Amortization   (145,375 )   (158,803 ) (8 %)
Total Operating Expenses (4,925,236 ) (4,298,526 ) 15 %
 
Operating Income $ 1,016,758 $ 413,639 146 %
 
Interest Income 35,124 17,798 97 %
Interest (Expense)   (10,473 )   (39,989 ) (74 %)
Income Before Taxes 1,041,409 391,448 166 %
 
Provision for Taxes   (75,000 )   (60,598 ) 24 %
 
Net Income $ 966,409 $ 330,850 192 %
 
Dividends on Preferred Stock   (146,611 )   (117,160 ) 25 %
 
Net Income to Common Shareholders $ 819,798   $ 213,690   284 %
 
GAAP EPS, Basic $ 0.04 $ 0.01 277 %
GAAP EPS, Diluted $ 0.04   $ 0.01   283 %
 
Weighted Average Shares, Basic 19,786,000 19,424,000
Weighted Average Shares, Diluted 20,363,000 20,338,000
 
         
Park City Group, Inc.
RECONCILIATION OF NON-GAAP ITEMS
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17 % Chg.
 
Net Income $ 966,409 $ 330,850 192 %
 
Adjustments:
Depreciation and Amortization 145,375 158,803 (8 %)
Interest Expense (Income) (24,651 ) 22,191 NM
Provision for Taxes 75,000 60,598 24 %
Other (Incl. Bad Debt Exp.) 100,000 50,000 100 %
Stock Compensation Expense   95,688     198,314   (52 %)
 
Adjusted EBITDA $ 1,357,821 $ 820,756 65 %
 
 
Net Income $ 966,409 $ 330,850 192 %
 
Adjustments:
Stock Compensation Expense 95,688 198,314 (52 %)
Acquisition Related Amortization   32,850     32,850  
 
Adjusted non-GAAP Net Income 1,094,947 562,014 95 %
 
Preferred Dividends   (146,611 )   (117,160 ) 25 %
 
Adjusted non-GAAP Net Income
to Common Shareholders $ 948,336 $ 444,854 113 %
 
Adjusted Non-GAAP EPS $ 0.05 $ 0.02 113 %
 
Weighted Average Shares, Diluted 20,363,000 20,338,000
 
     
Park City Group, Inc.
CONSOLIDATED BALANCE SHEET
 
Period Ended
FY ENDS June 9/30/18 6/30/18
 
Assets
 
Current Assets:
Cash $ 16,451,196 $ 14,892,439
Receivables, Net Allowances 3,696,908 4,222,348
Contract Asset (Current Portion of Unbilled) 2,197,201 3,502,287
Prepaid Expenses and Other Current Assets   829,039     1,116,387  
Total Current Assets $ 23,174,344 $ 23,733,461
 
Property and Equipment, Net $ 1,809,830 $ 1,896,348
 
Other Assets:
Deposits, and Other Assets 18,691 18,691
Contract Asset (Long-Term Portion of Unbilled) 2,808,194 1,194,574
Investments 477,884 477,884
Customer Relationships 886,950 919,800
Goodwill 20,883,886 20,883,886
Capitalized Software Costs, Net   144,410     168,926  
Total Other Assets $ 25,220,015 $ 23,663,761
 
Total Assets $ 50,204,189   $ 49,293,570  
 
 
Liabilities
 
Current Liabilities:
Accounts Payable $ 939,520 $ 1,490,434
Accrued Liabilities 1,526,448 745,694
Contract Liability (Deferred Revenue) 2,115,539 2,335,286
Lines of Credit 4,660,000 3,230,000
Current Portion of Notes Payable   36,400     188,478  
Total Current Liabilities $ 9,277,907 $ 7,989,892
 
Long-Term Liabilities:
Notes Payable, Less Current Portion 267,612 1,592,077
Other Long-Term Liabilities       7,275  
Total Long-Term Liabilities $ 267,612 $ 1,599,352
 
Total Liabilities $ 9,545,519 $ 9,589,244
 
Shareholder Equity
 
Series B Preferred $ 6,254 $ 6,254
Series B-1 Preferred 2,124 2,124
Common Stock 197,927 197,738
Additional Paid-In Capital 76,846,244 76,711,887
Accumulated Deficit   (36,393,879 )   (37,213,677 )
 
Total Shareholder Equity $ 40,658,670 $ 39,704,326
 
Total Liabilities and Shareholder Equity $ 50,204,189   $ 49,293,570  
 
       
Park City Group, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
 
3 Months Ended
FY ENDS June 9/30/18 9/30/17
 
Cash Flows From Operating Activities:
Net Income $ 966,409 $ 330,850
 
Adj. to Reconcile Net Income to Net Cash from Operating Activities:
Depreciation and Amortization 145,376 158,803
Bad Debt Expense 100,000 50,000
Stock Compensation Expense 95,688 198,314
Decrease (Increase) in Accounts Receivables 1,730,526 (711,674 )
Decrease (Increase) in LT Receivables, Prepaid Expenses and Other
Assets
(1,326,272 ) 459,814
Increase (Decrease) in Accounts Payable (550,914 ) 324,963
Increase (Decrease) in Accrued Liabilities 666,002 53,993
Increase (Decrease) in Deferred Revenue   (220,023 )   190,454  
Net Cash From (Used In) Operating Activities $ 1,606,792 $ 1,055,517
 
Cash Flows From Investing Activities:
Capitalization of Software Costs (111,241 )
Purchase of Property and Equipment   (1,492 )   (86,732 )
Net Cash From (Used In) Investing Activities $ (1,492 ) $ (197,973 )
 
Cash Flows From Financing Activities:
Proceeds from Issuance of Notes Payable 56,078
Net Increase in Line of Credit 1,430,000
Payments on Notes Payable and Capital Leases   (1,476,543 )   (81,842 )
Net Cash From (Used In) Financing Activities $ (46,543 ) $ (25,764 )
 
Net Increase (Decrease) in Cash $ 1,558,757 $ 831,780
 
Cash at Beginning of Period   14,892,439     14,054,006  
 
Cash at End of Period $ 16,451,196   $ 14,885,786  
 

Non-GAAP Financial Measures

While this press release does not include non-GAAP financial measures,
the financial presentation below contains certain financial measures
defined as “non-GAAP financial measures” by the Securities and Exchange
Commission, including non-GAAP EBITDA and non-GAAP earnings per share.
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, 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, amortization of acquired intangible assets and
other one-time cash and non-cash charges. 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.
Because Park City Group has historically reported certain non-GAAP
results to investors, the Company believes that the inclusion of
non-GAAP measures in the financial presentation below allows investors
to compare the Company’s financial results with the Company’s historical
financial results reported using non-GAAP financial measures, as well as
with the financial results reported by others.

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.

Contacts

Investor Relations:
Park City Group, Inc.
Todd
Mitchell, CFO, 435-645-2216
investor-relations@parkcitygroup.com
or
Hayden
IR
Rob Fink / Brett Maas
646-415-8972 / 646-536-7331
PCYG@haydenir.com

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