Park City Group Reports 148% Increase in Income from Operations for the Second Quarter of Fiscal 2022

Company achieves 99% Recurring SaaS Revenue

Continues Strategic Effort Towards Traceability Solution for FDA Mandates

Park City Group, Inc. (NASDAQ: PCYG), the parent company of ReposiTrak, Inc., which operates a B2B ecommerce, compliance, and supply chain platform that largely partners with grocery retailers, wholesalers, and their suppliers, to accelerate sales, control risk, improve supply chain efficiencies, and source hard-to-find items, today announced financial results for the second quarter of fiscal 2022, the period ended December 31, 2021.

Second Quarter Financial Highlights:

  • Total revenue decreased 16% to $4.4 million from $5.2 million due to planned conversion of all non-recurring revenue including MarketPlace.
  • Recurring SaaS revenue increased from 78% of total revenue to 99% of revenue.
  • Recurring revenue increased 7% to $4.3 million. Year-to-date, recurring revenue increased 9% to $8.7 million.
  • Total operating expenses decreased 29% to $3.4 million from $4.8 million due to lower overall SG&A expenses and planned conversion of MarketPlace.
  • Operating income increased 148% to $958,000 from $386,000 in the second quarter last year.
  • GAAP net income decreased 46% to $872,000 vs. net income of $1.6 million due to a $1.1 million gain in the prior year related to forgiveness of the Company’s PPP loan. Excluding this non-recurring PPP gain, net income increased 66%.
  • Net income to common shareholders decreased 51% to $725,000, vs. $1.5 million, due to the $1.1 million non-recurring PPP gain in the prior-year quarter.
  • EPS of $0.04 vs. $0.08 in the prior year second quarter.
  • Cash from operations of $3.1 million year-to-date.
  • The company repurchased 244,552 shares at an average price of $5.85 for a total of $1.43 million in the quarter and has $10.5 million remaining on its buyback authorization.

Randall K. Fields, Chairman and CEO of Park City Group commented, “As planned, we delivered 99% recurring revenue as a SaaS model, giving us and our shareholders greater visibility and predictability to our topline. This is evident in the 7% increase in recurring revenue this quarter and 9% year to date. Elimination of non-recurring revenue and sunsetting ancillary and low-margin revenue streams supports our ongoing revenue strategy and strengthens our preparation for track and trace initiatives, certainly one of the largest opportunities in our company’s history. We also aligned our revenue strategy with spending, evident in our 149% increase in operating income, clearly demonstrating our emphasis on profitability and cash flow growth.”

Mr. Fields continued, “With growth in recurring revenue and continued decreases in our cash expenses, we have structural and predictable profitability and cash flow. We continue to leverage the company as the clear leader, and the obvious partner, to help the entire industry confront and address supply chain challenges, food safety compliance requirements. The FDA traceability mandates are coming either through FDA mandate or self-interest in the food industry. Interest in our track and trace capabilities remains robust, adoption of our compliance solutions as well as our supply chain services are all progressing. We are well-aligned with our customers’ needs for transparency, traceability, supply chain and compliance. As the FDA requirements become clearer, I am confident we will be prepared to execute flawlessly.”

Second Quarter Financial Results (three months ended December 31, 2021, vs. three months ended December 31, 2020):

Total revenue decreased 16% to $4.4 million as compared to $5.2 million due to an approximate $1 million decrease in MarketPlace revenue and the planned elimination of all non-recurring revenue. This was partially offset by a 7% increase in core recurring SaaS revenue. Total operating expense decreased 29% to $3.4 million due to a decrease in cost of goods related to the lower MarketPlace revenue and lower operating expenses. GAAP net income was $872,000, versus $1.6 million. The prior-year quarter included a $1.1 million gain related to the forgiveness of the Company’s PPP loan. Excluding this non-recurring gain, net income would have increased 66%. GAAP net income to common shareholders was $725,000, or $0.04 per diluted share, compared to $1.5 million (inclusive of the $1.1 million non-recurring gain), or $0.08 per diluted share.

Year-To-Date Financial Results (six months ended December 31, 2021, vs. six months ended December 31, 2020):

Total revenue decreased 14% to $8.9 million as compared to $10.4 million due largely to a nearly $2.1 million planned elimination of all non-recurring revenue including MarketPlace. This was partially offset by a 9% increase in core recurring SaaS revenue. Total operating expense decreased 28% to $6.8 million due to a decrease lower operating expenses and elimination of MarketPlace costs. GAAP net income was $1.8 million versus $2.2 million. The prior-year period included a $1.1 million gain related to the forgiveness of the Company’s PPP loan. Absent the one-time gain, net income increased 69%. GAAP net income to common shareholders was $1.5 million, or $0.08 per diluted share, compared to $1.8 million (inclusive of the $1.1 million non-recurring gain), or $0.10 per diluted share.

Share Repurchases:

In the second quarter, the Company repurchased 244,552 shares at an average price of $5.85 for a total of $1.43 million. Since share repurchases began in May 2019, the Company has repurchased 1,002,914 shares at an average price of $5.66 for a total of $ 5.7 million. The Company has approximately $10.5 million remaining on the $12 million buyback authorization.

Balance Sheet:

The Company had $21.7 million in cash and cash equivalents at December 31, 2021, compared to $24.1 million at June 30, 2021, reflecting the paydown of Park City’s $6 million working line of credit in the first quarter. The Company had $930,000 drawn on its working line of credit as of December 31, 2021. Funds were utilized to buy back additional shares of stock.

Conference Call:

The Company will host a conference call at 4:15 p.m. Eastern today to discuss the Company’s results. The conference call will also be webcast and will be available via the investor relations section of the Company’s website, www.parkcitygroup.com.

Participant Dial-In Numbers:

Date: Monday, February 14th

Time: 4:15 p.m. ET (1:15 p.m. PT)

Toll-Free: 1-877-407-9716

Toll/International 1-201-493-6779

Conference ID: 13726882

Replay Dial-In Numbers:

Toll Free: 1-844-512-2921

Toll/International: 1-412-317-6671

Replay Start: Monday February 14, 2022, 7:15 p.m. ET

Replay Expiry: Monday March 14, 2022, 11:59 p.m. ET

Replay Pin Number: 13726882

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 June 30, 2020 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 Balance Sheets (Unaudited)

 

 

 

December 31,

 

 

June 30,

 

2021

2021

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

21,708,693

 

 

$

24,070,322

 

Receivables, net of allowance for doubtful accounts of $267,039 and $234,693 at December 31, 2021 and June 30, 2021, respectively

 

 

3,491,793

 

 

 

3,891,699

 

Contract asset – unbilled current portion

 

 

821,868

 

 

 

1,248,936

 

Prepaid expense and other current assets

 

 

972,099

 

 

 

490,817

 

Total Current Assets

 

 

26,994,453

 

 

 

29,701,774

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

932,896

 

 

 

2,589,194

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

Deposits and other assets

 

 

22,414

 

 

 

22,414

 

Prepaid expense – less current portion

 

 

21,827

 

 

 

47,987

 

Contract asset – unbilled long-term portion

 

 

174,741

 

 

 

408,925

 

Operating lease – right-of-use asset

 

 

650,988

 

 

 

695,371

 

Customer relationships

 

 

459,900

 

 

 

525,600

 

Goodwill

 

 

20,883,886

 

 

 

20,883,886

 

Capitalized software costs, net

 

 

143,108

 

 

 

171,732

 

 

 

 

 

 

 

 

 

 

Total Other Assets

 

 

22,356,864

 

 

 

22,755,915

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

50,284,213

 

 

$

55,046,883

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

482,915

 

 

$

467,194

 

Accrued liabilities

 

 

1,075,852

 

 

 

988,092

 

Contract liability - deferred revenue

 

 

1,657,859

 

 

 

1,755,341

 

Lines of credit

 

 

930,000

 

 

 

6,000,000

 

Operating lease liability - current

 

 

92,453

 

 

 

90,156

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

4,239,079

 

 

 

9,300,783

 

 

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Operating lease liability – less current portion

 

 

558,535

 

 

 

605,214

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

4,797,614

 

 

 

9,905,997

 

 

 

 

 

 

 

 

 

 

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 December 31, 2021 and June 30, 2021

 

 

6,254

 

 

 

6,254

 

Series B-1 Preferred, 550,000 shares authorized; 212,402 shares issued and outstanding at December 31, 2021 and June 30, 2021

 

 

2,124

 

 

 

2,124

 

Common Stock, $0.01 par value, 50,000,000 shares authorized; 19,154,464 and 19,351,935 issued and outstanding at December 31, 2021 and June 30, 2021, respectively

 

 

191,547

 

 

 

193,522

 

Additional paid-in capital

 

 

73,120,949

 

 

 

74,298,924

 

Accumulated deficit

 

 

(27,834,275

)

 

 

(29,359,938

)

 

 

 

 

 

 

 

 

 

Total stockholders equity

 

 

45,486,599

 

 

 

45,140,886

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders equity

 

$

50,284,213

 

 

$

55,046,883

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

December 31,

 

 

December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,353,587

 

 

$

5,174,204

 

 

$

8,913,264

 

 

$

10,399,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and product support

 

 

817,213

 

 

 

2,091,588

 

 

 

1,663,700

 

 

 

4,072,545

 

Sales and marketing

 

 

1,152,036

 

 

 

1,205,295

 

 

 

2,340,929

 

 

 

2,488,336

 

General and administrative

 

 

1,209,002

 

 

 

1,231,139

 

 

 

2,305,658

 

 

 

2,313,064

 

Depreciation and amortization

 

 

217,767

 

 

 

261,597

 

 

 

478,931

 

 

 

510,097

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expense

 

 

3,396,018

 

 

 

4,789,619

 

 

 

6,789,218

 

 

 

9,384,042

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

957,569

 

 

 

384,585

 

 

 

2,124,046

 

 

 

1,015,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

86,884

 

 

 

81,503

 

 

 

142,040

 

 

 

115,844

 

Interest expense

 

 

(3,303

)

 

 

(1,907

)

 

 

(6,201

)

 

 

(72,452

)

Unrealized gain (loss) on short term investments

 

 

(113,807

)

 

 

71,828

 

 

 

(263,098

)

 

 

55,565

 

Other gain (loss)

 

 

-

 

 

 

1,099,350

 

 

 

(83,081

)

 

 

1,099,350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

927,343

 

 

 

1,635,359

 

 

 

1,913,706

 

 

 

2,213,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Provision) for income taxes:

 

 

(55,275

)

 

 

(12,500

)

 

 

(94,821

)

 

 

(36,186

)

Net income

 

 

872,068

 

 

 

1,622,859

 

 

 

1,818,885

 

 

 

2,177,685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

 

(146,611

)

 

 

(146,611

)

 

 

(293,222

)

 

 

(293,222

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shareholders

 

$

725,457

 

 

$

1,476,248

 

 

$

1,525,663

 

 

$

1,884,463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares, basic

 

 

19,357,000

 

 

 

19,526,000

 

 

 

19,370,000

 

 

 

19,508,000

 

Weighted average shares, diluted

 

 

19,682,000

 

 

 

19,716,000

 

 

 

19,658,000

 

 

 

19,653,000

 

Basic income per share

 

$

0.04

 

 

$

0.08

 

 

$

0.08

 

 

$

0.10

 

Diluted income per share

 

$

0.04

 

 

$

0.08

 

 

$

0.08

 

 

$

0.10

 

PARK CITY GROUP, INC.

Consolidated Condensed Statements of Cash Flows (Unaudited)

 

 

 

Six Months

 

Ended December 31,

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

1,818,885

 

 

$

2,177,685

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

478,931

 

 

 

510,097

 

Amortization of operating right of use asset

 

 

44,382

 

 

 

42,196

 

Stock compensation expense

 

 

234,396

 

 

 

166,923

 

Bad debt expense

 

 

250,000

 

 

 

310,000

 

Gain on disposal of assets

 

 

(24,737

)

 

 

-

 

Gain on debt extinguishment

 

 

-

 

 

 

(1,099,350

)

Loss on sale of property and equipment

 

 

107,820

 

 

 

-

 

(Increase) decrease in:

 

 

 

 

 

 

 

 

Accounts receivables

 

 

285,141

 

 

 

520,719

 

Long-term receivables, prepaids and other assets

 

 

(97,532

)

 

 

685,158

 

(Decrease) increase in:

 

 

 

 

 

 

 

 

Accounts payable

 

 

15,721

 

 

 

131,654

 

Operating lease liability

 

 

(44,382

)

 

 

(42,196

)

Accrued liabilities

 

 

87,811

 

 

 

590,271

 

Deferred revenue

 

 

(97,482

)

 

 

(237,143

)

Net cash provided by operating activities

 

 

3,058,954

 

 

 

3,756,014

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Sale of property and equipment

 

 

1,374,085

 

 

 

-

 

Purchase of property and equipment

 

 

(17,049

)

 

 

(103,218

)

Net cash provided by (used in) investing activities

 

 

1,357,036

 

 

 

(103,218

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net (decrease) increase in lines of credit

 

 

(5,070,000

)

 

 

1,060,175

 

Common Stock buyback/retirement

 

 

(1,470,974

)

 

 

-

 

Proceeds from employee stock plan

 

 

56,577

 

 

 

50,328

 

Dividends paid

 

 

(293,222

)

 

 

(293,222

)

Payments on notes payable

 

 

-

 

 

 

(920,754

)

Net cash used in financing activities

 

 

(6,777,619

)

 

 

(103,473

)

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

(2,361,629

)

 

 

3,549,323

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

24,070,322

 

 

 

20,345,330

 

Cash and cash equivalents at end of period

 

$

21,708,693

 

 

$

23,894,653

 

 

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