ReposiTrak (TRAK) 10-Q 9 Nov 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2017	Nov. 09, 2017
Document And Entity Information
Entity Registrant Name	PARK CITY GROUP INC
Entity Central Index Key	50,471
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		19,446,635
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Current assets:
Cash	$ 14,885,786	$ 14,054,006
Receivables, net allowance for doubtful accounts of $339,733 and $392,250 at September 30, 2017 and June 30, 2017, respectively	4,670,801	4,009,127
Prepaid expense and other current assets	625,131	643,600
Total Current Assets	20,181,718	18,706,733
Property and equipment, net	2,091,301	2,115,277
Other assets:
Long-term receivables, deposits, and other assets	2,098,946	2,540,291
Investments	477,884	477,884
Customer relationships	1,018,350	1,051,200
Goodwill	20,883,886	20,883,886
Capitalized software costs, net	233,201	137,205
Total Other Assets	24,712,267	25,090,466
Total Assets	46,985,286	45,912,476
Current liabilities:
Accounts payable	890,450	565,487
Accrued liabilities	2,261,814	2,084,980
Deferred revenue	2,541,300	2,350,846
Line of credit	2,850,000	2,850,000
Current portion of notes payable	292,051	318,616
Total current liabilities	8,835,615	8,169,929
Long-term liabilities:
Notes payable, less current portion	1,997,754	1,996,953
Other long-term liabilities	29,376	36,743
Total liabilities	10,862,745	10,203,625
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value, 50,000,000 shares authorized; 19,423,821 and 19,423,821 issued and outstanding at September 30, 2017 and June 30, 2017, respectively	194,241	194,241
Additional paid-in capital	75,688,989	75,489,189
Accumulated deficit	(39,770,002)	(39,983,692)
Total stockholders' equity	36,122,541	35,708,851
Total liabilities and stockholders' equity	46,985,286	45,912,476
Series B Preferred Stock [Member]
Stockholders' equity:
Preferred Stock	6,254	6,254
Series B1 Preferred Stock [Member]
Stockholders' equity:
Preferred Stock	$ 3,059	$ 2,859

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
Current assets:
Receivables, net of allowance	$ 339,733	$ 392,250
Stockholders' equity:
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, authorized	30,000,000	30,000,000
Common stock, par value	$ .01	$ .01
Common stock, authorized	50,000,000	50,000,000
Common stock, issued	19,423,821	19,423,821
Common stock, outstanding	19,423,821	19,423,821
Series B Preferred Stock [Member]
Stockholders' equity:
Preferred stock, issued	625,375	625,375
Preferred stock, outstanding	625,375	625,375
Series B1 Preferred Stock [Member]
Stockholders' equity:
Preferred stock, issued	305,859	285,859
Preferred stock, outstanding	305,859	285,859

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Income Statement [Abstract]
Revenues	$ 4,712,165	$ 4,216,545
Operating expenses:
Cost of services and product support	1,418,013	1,203,515
Sales and marketing	1,585,940	1,193,176
General and administrative	1,135,770	1,023,150
Depreciation and amortization	158,803	116,580
Total operating expenses	4,298,526	3,536,421
Income from operations	413,639	680,124
Other expense:
Net Interest expense	(22,191)	(6,487)
Income before income taxes	391,448	673,637
Provision for income taxes	(60,598)	(59,184)
Net income	330,850	614,453
Dividends on preferred stock	(117,160)	(186,804)
Net income applicable to common shareholders	$ 213,690	$ 427,649
Weighted average shares, basic	19,424,000	19,266,000
Weighted average shares, diluted	20,338,000	20,099,000
Basic income per share	$ 0.01	$ 0.02
Diluted income per share	$ 0.01	$ 0.02

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities:
Net income	$ 330,850	$ 614,453
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	158,803	116,580
Stock compensation expense	198,314	239,056
Bad debt expense	50,000	80,700
(Increase) decrease in:
Accounts receivables	(711,674)	(1,188,259)
Long-term receivables, prepaid and other assets	459,814	73,207
(Decrease) increase in:
Accounts payable	324,963	(10,250)
Accrued liabilities	53,993	30,002
Deferred revenue	190,454	(77,198)
Net cash provided by operating activities	1,055,517	(121,709)
Cash Flows From Investing Activities:
Capitalization of software costs	(111,241)	0
Purchase of property and equipment	(86,732)	(15,800)
Net cash used in investing activities	(197,973)	(15,800)
Cash Flows From Financing Activities:
Proceeds from issuance of note payable	56,078	0
Proceeds from employee stock plans	0	113,987
Proceeds from exercise of warrants	0	35,000
Dividends paid	0	(2,644)
Payments on notes payable and capital leases	(81,842)	(66,581)
Net cash provided (used in) by financing activities	(25,764)	79,762
Net increase (decrease) in cash and cash equivalents	831,780	(57,747)
Cash and cash equivalents at beginning of period	14,054,006	11,443,388
Cash and cash equivalents at end of period	14,885,786	11,385,641
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	66,163	59,184
Cash paid for interest	22,452	11,223
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Preferred stock to pay accrued liabilities	200,000	100,000
Common stock to pay accrued liabilities	0	394,570
Dividends accrued on preferred stock	117,160	186,804
Dividends paid with preferred stock	$ 0	$ 180,110

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	3 Months Ended
	Sep. 30, 2017
Notes to Financial Statements
DESCRIPTION OF BUSINESS	Park City Group, Inc. (the “ Company SaaS The Company’s services provide its customers with greater flexibility in sourcing products by enabling them to choose new suppliers and integrate them into their supply chain faster and more cost effectively, and we help them to more efficiently manage these relationships, enhancing revenue while lowering working capital, labor costs and waste. Our ReposiTrak food safety solutions also help reduce a company’s potential regulatory, legal, and criminal risk from its supply chain partners by providing a way for them to ensure these suppliers are compliant with food safety regulations, such as the Food Safety Modernization Act (“ FSMA The Company’s services are delivered though proprietary software products designed, developed, marketed and supported by the Company. These products are designed to provide transparency and facilitate improved business processes among all key constituents in the supply chain, starting with the retailer and moving back to suppliers and eventually to raw material providers. The Company provides cloud-based applications and services that address e-commerce, supply chain, and food safety and compliance activities. The principal customers for the Company's products are multi-store food retail store chains and their suppliers, branded food manufacturers, food wholesalers and distributors, and other food service businesses. The Company has a hub and spoke business model. The Company is typically engaged by retailers and distributors (“ Hubs Spokes The Company is incorporated in the state of Nevada. The Company has three principal subsidiaries: PC Group, Inc., a Utah corporation (98.76% owned), Park City Group, Inc., a Delaware corporation (100% owned) and ReposiTrak, Inc., a Utah corporation (100% owned). All intercompany transactions and balances have been eliminated in consolidation. Our principal executive offices of the Company are located at 299 South Main Street, Suite 2225, Salt Lake City, Utah 84111. Our telephone number is (435) 645-2000. Our website address is http://www.parkcitygroup.com, and ReposiTrak’s website address is http://repositrak.com. Basis of Financial Statement Presentation The interim financial information of the Company as of September 30, 2017 and for the three months ended September 30, 2017 and 2016 is unaudited, and the balance sheet as of June 30, 2017 is derived from audited financial statements. The accompanying condensed consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended June 30, 2017. In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three months ended September 30, 2017 are not necessarily indicative of the results that can be expected for the fiscal year ending June 30, 2018. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2017.

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
	Sep. 30, 2017
Significant Accounting Policies
SIGNIFICANT ACCOUNTING POLICIES	Principles of Consolidation The financial statements presented herein reflect the consolidated financial position of Park City Group, Inc. and subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as those that are most important to the portrayal of the Company’s financial condition and results, and require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: income taxes, goodwill and other long-lived asset valuations, revenue recognition, stock-based compensation, and capitalization of software development costs. Earnings Per Share Basic net income per common share (“ Basic EPS Diluted EPS The following table presents the components of the computation of basic and diluted earnings per share for the periods indicated: Three Months Ended September 30, 2017 2016 Numerator Net income applicable to common shareholders $ 213,690 $ 427,649 Denominator Weighted average common shares outstanding, basic 19,424,000 19,266,000 Warrants to purchase common stock 914,000 833,000 Weighted average common shares outstanding, diluted 20,338,000 20,099,000 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02 Reclassifications Certain prior-year amounts have been reclassified to conform with the current year's presentation.

EQUITY

EQUITY	3 Months Ended
	Sep. 30, 2017
Warrants
EQUITY	Restricted Stock Units Restricted Stock Units Weighted Average Grant Date Fair Value ($/share) Outstanding at June 30, 2017 982,613 $ 6.01 Granted - - Vested and issued - - Forfeited - - Outstanding at September 30, 2017 982,613 $ 6.01 The number of restricted stock units outstanding at September 30, 2017 included 58,353 units that have vested but for which shares of common stock had not yet been issued pursuant to the terms of the agreement. As of September 30, 2017, there was approximately $5,900,000 of unrecognized stock-based compensation expense under our equity compensation plans, which is expected to be recognized on a straight line basis over a weighted average period of 4.3 years. Warrants The following tables summarize information about warrants outstanding and exercisable at September 30, 2017: Warrants Outstanding at September 30, 2017 Warrants Exercisable at September 30, 2017 Range of exercise prices Number Outstanding Weighted average remaining contractual life (years) Weighted average exercise price Number exercisable Weighted average exercise price $ 3.45 – 4.00 1,271,618 2.07 $ 3.94 1,271,618 $ 3.94 $ 6.45 – 10.00 100,481 1.24 $ 7.29 100,481 $ 7.29 1,372,099 2.01 $ 4.18 1,372,099 $ 4.18 Preferred Stock The Company’s certificate of incorporation currently authorizes the issuance of up to 30,000,000 shares of ‘blank check’ preferred stock with designations, rights, and preferences as may be determined from time to time by the Company’s Board of Directors, of which 700,000 shares are currently designated as Series B Preferred Stock (“ Series B Preferred Series B-1 Preferred PIK Shares In July 2017, the Company issued 20,000 shares of Series B-1 Preferred in satisfaction of an accrued bonus payable to the Company's Chief Executive Officer.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Sep. 30, 2017
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	During the three months ended September 30, 2017, the Company continued to be a party to a Service Agreement with Fields Management, Inc. (“ FMI

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	3 Months Ended
	Sep. 30, 2017
Income Taxes
RECENT ACCOUNTING PRONOUNCEMENTS	In May 2014, August 2015, April 2016, May 2016 and September 2017, the Financial Accounting Standards Board (" FASB In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. Historically, there has been a diversity in practice in how certain cash receipts/payments are presented and classified in the statement of cash flows under Topic 230. To reduce the existing diversity in practice, this update addresses multiple cash flow issues. The amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company notes that this guidance applies to its reporting requirements and will implement the new guidance accordingly. In March 2016, the FASB issued ASU 2016-09 (ASC Topic 718), Stock Compensation—Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU are intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax consequences, classification on the consolidated statement of cash flows and treatment of forfeitures. The amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company is in the process of assessing the impact, if any, of this ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02 (ASC Topic 842), Leases. The ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is in the process of assessing the impact on its consolidated financial statements.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	After careful consideration, the Board of Directors has directed management to engage a financial advisory firm to explore strategic options for the Company. There can be no assurance with regards to the timing or outcome of this strategic review. The Company does not intend to disclose or comment on developments related to this review unless and until the Board has approved a specific course of action, or otherwise determined that further disclosure is appropriate or required. In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events, through the filing date and noted no additional subsequent events that are reasonably likely to impact the financial statements.

SIGNIFICANT ACCOUNTING POLICI12

SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
Principles of Consolidation	The financial statements presented herein reflect the consolidated financial position of Park City Group, Inc. and subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.
Use of Estimates	The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates. The methods, estimates and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its financial statements. The Securities and Exchange Commission has defined the most critical accounting policies as those that are most important to the portrayal of the Company’s financial condition and results, and require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: income taxes, goodwill and other long-lived asset valuations, revenue recognition, stock-based compensation, and capitalization of software development costs.
Earnings Per Share	Earnings Per Share Basic net income per common share (“ Basic EPS Diluted EPS The following table presents the components of the computation of basic and diluted earnings per share for the periods indicated: Three Months Ended September 30, 2017 2016 Numerator Net income applicable to common shareholders $ 213,690 $ 427,649 Denominator Weighted average common shares outstanding, basic 19,424,000 19,266,000 Warrants to purchase common stock 914,000 833,000 Weighted average common shares outstanding, diluted 20,338,000 20,099,000 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02
Reclassifications	Certain prior-year amounts have been reclassified to conform with the current year's presentation.

SIGNIFICANT ACCOUNTING POLICI13

SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Sep. 30, 2017
Significant Accounting Policies Tables
Basic and diluted earnings per share	Three Months Ended September 30, 2017 2016 Numerator Net income applicable to common shareholders $ 213,690 $ 427,649 Denominator Weighted average common shares outstanding, basic 19,424,000 19,266,000 Warrants to purchase common stock 914,000 833,000 Weighted average common shares outstanding, diluted 20,338,000 20,099,000 Net income per share Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02

EQUITY (Tables)

EQUITY (Tables)	3 Months Ended
	Sep. 30, 2017
Warrants
Restricted stock	Restricted Stock Units Weighted Average Grant Date Fair Value ($/share) Outstanding at June 30, 2017 982,613 $ 6.01 Granted - - Vested and issued - - Forfeited - - Outstanding at September 30, 2017 982,613 $ 6.01
Warrants	Warrants Outstanding at September 30, 2017 Warrants Exercisable at September 30, 2017 Range of exercise prices Number Outstanding Weighted average remaining contractual life (years) Weighted average exercise price Number exercisable Weighted average exercise price $ 3.45 – 4.00 1,271,618 2.07 $ 3.94 1,271,618 $ 3.94 $ 6.45 – 10.00 100,481 1.24 $ 7.29 100,481 $ 7.29 1,372,099 2.01 $ 4.18 1,372,099 $ 4.18

DESCRIPTION OF BUSINESS (Detail

DESCRIPTION OF BUSINESS (Details Narrative)	3 Months Ended
	Sep. 30, 2017
Incorporated state	State of Nevada
PC Group Inc. [Member]
Incorporated state	Utah
Ownership interest by parent	98.76%
Park City Group Inc. [Member]
Incorporated state	Delaware
Ownership interest by parent	100.00%
ReposiTrak [Member]
Incorporated state	Utah
Ownership interest by parent	100.00%

SIGNIFICANT ACCOUNTING POLICI16

SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Numerator
Net income (loss) applicable to common shareholders	$ 213,690	$ 427,649
Denominator
Weighted average shares, basic	19,424,000	19,266,000
Warrants to purchase common stock	914,000	833,000
Weighted average shares, diluted	20,338,000	20,099,000
Net income (loss per share)
Basic income (loss) per share	$ 0.01	$ 0.02
Diluted income (loss) per share	$ 0.01	$ 0.02

EQUITY (Details)

EQUITY (Details) - Restricted Stock [Member]	3 Months Ended
	Sep. 30, 2017$ / sharesshares
Restricted stock units
Outstanding, beginning of period | shares	982,613
Granted | shares	0
Vested and issued | shares	0
Forfeited | shares	0
Outstanding, end of period | shares	982,613
Outstanding, beginning of period | $ / shares	$ 6.01
Granted | $ / shares	0
Vested and issued | $ / shares	0
Forfeited | $ / shares	0
Outstanding, end of period | $ / shares	$ 6.01

EQUITY (Details 1)

EQUITY (Details 1) - Warrant [Member]	3 Months Ended
	Sep. 30, 2017$ / sharesshares
Outstanding at End of Period, Shares | shares	1,372,099
$3.50-4.00 [Member]
Outstanding at End of Period, Shares | shares	1,271,618
Weighted average remaining contractual life (years), Shares Outstanding	2 years 25 days
Weighted average exercise price, Shares Outstanding	$ 3.94
Exercisable at End of Period, Shares | shares	1,271,618
Weighted average exercise price, Shares Exercisable	$ 3.94
$6.45-10.00 [Member]
Outstanding at End of Period, Shares | shares	100,481
Weighted average remaining contractual life (years), Shares Outstanding	1 year 2 months 26 days
Weighted average exercise price, Shares Outstanding	$ 7.29
Exercisable at End of Period, Shares | shares	100,481
Weighted average exercise price, Shares Exercisable	$ 7.29
Minimum [Member] | $3.50-4.00 [Member]
Range of exercise prices	3.45
Minimum [Member] | $6.45-10.00 [Member]
Range of exercise prices	6.45
Maximum [Member] | $3.50-4.00 [Member]
Range of exercise prices	4
Maximum [Member] | $6.45-10.00 [Member]
Range of exercise prices	$ 10

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Sep. 30, 2017	Jun. 30, 2017
FMI [Member]
Due to related parties	$ 149,063	$ 77,628