[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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37-1454128
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State or other jurisdiction of incorporation
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(IRS Employer Identification No.)
|
|
299 South Main Street, Suite 2370
Salt Lake City, Utah 84111
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(435) 645-2000
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(Address of principal executive offices)
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(Registrant's telephone number, including area code)
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Title of each Class
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Name of each exchange on which registered
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Common Stock, $0.01 Par Value
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NASDAQ Capital Market
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Large accelerated filer
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[ ]
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Accelerated filer
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[X]
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Non-accelerated filer
(Do not check if a smaller reporting company)
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[ ]
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Smaller reporting company
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[ ]
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PART 1
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||
1 | ||
10 | ||
19 | ||
19 | ||
Item 4. | Mine Safety Disclosures | 19 |
20 | ||
Item 6. | Selected Financial Data | 20 |
21 | ||
30 | ||
30 | ||
31 | ||
31 | ||
31 | ||
32 | ||
32 | ||
32 | ||
32 | ||
32 | ||
33 | ||
35 | ||
F-1 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 | ||
Exhibit 31
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Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Exhibit 32
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Certifications pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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ITEM I.
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BUSINESS
|
●
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synchronizing retailers and suppliers so they can actually exchange information;
|
●
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aligning their financial interests with payment and invoicing protocols and systems;
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●
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enlisting brain power of suppliers to help retailers manage complex businesses;
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●
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providing information to each side to identify and fix out of stocks and overstocks;
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●
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providing forecasting technology to improve store orders;
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●
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providing forecasting to help suppliers replenish retailer warehouses;
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●
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providing systems for suppliers to actually manage inventory flow to retailers; and
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●
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helping suppliers with overall demand planning and line sequencing.
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ITEM 1A.
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RISK
FACTORS
|
●
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it may be difficult for the Company to predict the amount of service and technological resources that will be needed by customers of ReposiTrak™ or other new offerings, and if the Company underestimates the necessary resources, the quality of its service will be negatively impacted thereby undermining the value of the product to the customer;
|
●
|
the Company lacks experience with ReposiTrak™ and the market acceptance to accurately predict if it will be a profitable product;
|
●
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technological issues between the Company and customers may be experienced in capturing data, and these technological issues may result in unforeseen conflicts or technological setbacks when implementing additional installations of RespoiTrak™. This may result in material delays and even result in a termination of the RespoiTrak™ engagement;
|
●
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the customer’s experience with ReposiTrak™ and other new offerings, if negative, may prevent the Company from having an opportunity to sell additional products and services to that customer;
|
●
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if customers do not use ReposiTrak™ as the Company recommends and fails to implement any needed corrective action(s), it is unlikely that customers will experience the business benefits from the software and may therefore be hesitant to continue the engagement as well as acquire any additional software products from the Company; and
|
●
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delays in proceeding with the implementation of ReposiTrak™ or other new products for a new customer will negatively affect the Company’s cash flow and its ability to predict cash flow.
|
●
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our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers' requirements;
|
●
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the renewal rates for our service;
|
●
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the amount and timing of operating costs and capital expenditures related to the operations and expansion of our business;
|
●
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changes in our pricing policies whether initiated by us or as a result of competition;
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●
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the cost, timing and management effort for the introduction of new features to our service;
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●
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the rate of expansion and productivity of our sales force;
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●
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new product and service introductions by our competitors;
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●
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variations in the revenue mix of editions or versions of our service;
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●
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technical difficulties or interruptions in our service;
|
●
|
general economic conditions that may adversely affect either our customers' ability or willingness to purchase additional subscriptions or upgrade their service, or delay a prospective customers' purchasing decision, or reduce the value of new subscription contracts or affect renewal rates;
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●
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timing of additional investments in our enterprise cloud computing application and platform services and in our consulting service;
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●
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regulatory compliance costs;
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●
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the timing of customer payments and payment defaults by customers;
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●
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extraordinary expenses such as litigation or other dispute-related settlement payments;
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●
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the impact of new accounting pronouncements; and
|
●
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the timing of stock awards to employees and the related financial statement impact.
|
●
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the Company’s customers may prefer one-time fees rather than monthly fees; and
|
●
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there may be a threshold level (number of locations) at which the monthly based fee structure may not be economical to the customer, and a request to convert from monthly fees to an annual fee could occur.
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●
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development of new software, software solutions or enhancements that are subject to constant change;
|
●
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rapidly evolving technological change; and
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●
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unanticipated changes in customer needs.
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●
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whether or how the Company will respond to technological changes in a timely or cost-effective manner;
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●
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whether the products or technologies developed by the Company’s competitors will render the Company’s products and services obsolete or shorten the life cycle of the Company’s products and services; and
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●
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whether the Company’s products and services will achieve market acceptance.
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●
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issuance of common stock in connection with funding agreements with third parties and future issuances of common and preferred stock by the Board of Directors; and
|
●
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the Board of Directors has the power to issue additional shares of common stock and preferred stock and the right to determine the voting, dividend, conversion, liquidation, preferences and other conditions of the shares without shareholder approval.
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ITEM 2.
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ITEM 3.
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LEGAL
PROCEEDINGS
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ITEM 5.
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MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Quarterly Common Stock Price Ranges
|
||||||||||||||||
2014
|
2013
|
|||||||||||||||
Fiscal Quarter Ended
|
High
|
Low
|
High
|
Low
|
||||||||||||
September 30
|
$
|
10.75
|
$
|
6.06
|
$
|
4.01
|
$
|
3.30
|
||||||||
December 31
|
$
|
11.61
|
$
|
7.95
|
$
|
3.30
|
$
|
2.79
|
||||||||
March 31
|
$
|
10.88
|
$
|
6.88
|
$
|
4.12
|
$
|
2.98
|
||||||||
June 30
|
$
|
13.97
|
$
|
9.00
|
$
|
7.58
|
$
|
3.60
|
ITEM 6.
|
SELECTED
FINANCIAL
DATA
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Subscription
|
$
|
9,398,377
|
$
|
8,025,025
|
$
|
1,373,352
|
17
|
%
|
||||||||
Other revenues
|
2,530,039
|
3,293,549
|
(763,510)
|
-23
|
%
|
|||||||||||
Total revenue
|
$
|
11,928,416
|
$
|
11,318,574
|
$
|
609,842
|
5
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Cost of services and product support
|
$
|
5,087,973
|
$
|
4,490,438
|
$
|
597,535
|
13
|
%
|
||||||||
Percent of total revenue
|
43
|
%
|
40
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Sales and marketing
|
$
|
4,741,574
|
$
|
3,054,361
|
$
|
1,687,213
|
55
|
%
|
||||||||
Percent of total revenue
|
40
|
%
|
27
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
General and administrative
|
$
|
3,812,265
|
$
|
2,474,169
|
$
|
1,338,096
|
54
|
%
|
||||||||
Percent of total revenue
|
32
|
%
|
22
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Depreciation and amortization
|
$
|
879,329
|
$
|
901,407
|
$
|
(22,078)
|
-2
|
%
|
||||||||
Percent of total revenue
|
7
|
%
|
8
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Interest income (expense)
|
102,580
|
(140,712)
|
$
|
243,292
|
173
|
%
|
||||||||||
Percent of total revenue
|
1
|
%
|
-1
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Preferred dividends
|
$
|
617,891
|
$
|
911,580
|
$
|
(293,689)
|
-32
|
%
|
||||||||
Percent of total revenue
|
5
|
%
|
8
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Cash and Cash Equivalents
|
$
|
3,352,559
|
$
|
3,616,585
|
$
|
(264,026)
|
-7
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Cash flows (used in) operating activities
|
$
|
(92,534
|
)
|
$
|
(149,064)
|
$
|
56,530
|
38
|
%
|
2014
|
2013
|
|||||||
Net (loss) income
|
$
|
(2,490,145)
|
$
|
257,487
|
||||
Noncash expense and income, net
|
2,882,344
|
1,889,669
|
||||||
Net changes in operating assets and liabilities
|
(484,733)
|
(2,296,220
|
)
|
|||||
$
|
(92,534)
|
$
|
(149,064
|
) |
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Cash flows used in investing activities
|
$
|
(1,652,725)
|
$
|
(445,744)
|
$
|
(1,206,981)
|
271
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Cash flows provided by financing activities
|
$
|
1,481,233
|
$
|
3,105,217
|
$
|
(1,623,984)
|
-52
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Current assets
|
$
|
6,461,397
|
$
|
6,403,860
|
$
|
57,537
|
1
|
%
|
Fiscal Year Ended June 30,
|
Variance
|
|||||||||||||||
2014
|
2013
|
Dollars
|
Percent
|
|||||||||||||
Current liabilities
|
$
|
5,807,355
|
$
|
5,279,384
|
$
|
527,971
|
10
|
%
|
1.
|
Identify contract with customer;
|
2.
|
Identify the performance obligations in the contract;
|
3.
|
Determine the transaction price;
|
4.
|
Allocate the transaction price to the performance obligations in the contract; and
|
5.
|
Recognize revenue when the performance obligation is satisfied.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL
STATEMENTS
|
ITEM 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS
AND PROCEDURES
|
(a)
|
Evaluation of disclosure controls and procedures.
|
(b)
|
Management's Annual Report on Internal Control over Financial Reporting.
|
ITEM 9B.
|
OTHER
INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
Description
|
|
2.1
|
Agreement and Plan of Merger and Reorganization, Dated August 28, 2008
(1)
|
|
2.2
|
Form of Stock Purchase Agreement
(1)
|
|
2.3
|
Form of Stock Voting Agreement
(1)
|
|
2.4
|
Form of Promissory Note
(2)
|
|
3.1
|
Articles Of Incorporation
(3)
|
|
3.2
|
Certificate Of Amendment
(4)
|
|
3.3
|
Certificate of Amendment
(5)
|
|
3.4
|
Bylaws
(3)
|
|
4.1
|
Certificate of Designation of the Series A Convertible Preferred Stock
(6)
|
|
4.2
|
Certificate of Designation of the Series B Convertible Preferred Stock
(7)
|
|
10.1
|
Subordinated Promissory Note, dated April 1, 2009, issued to Riverview Financial Corporation
(8)
|
|
10.2
|
Amendment to Loan Agreement and Note, by and between U.S. Bank National Association and the Company, dated September 15, 2009
(9)
|
|
10.3
|
Term Loan Agreement, by and between U.S. Bank National Association and the Company, dated May 5, 2010
(10)
|
|
10.4
|
Amendment to Loan Agreement and Note, by and between U.S. Bank National Association and the Company, dated May 5, 2010
(10)
|
|
10.5
|
Promissory Note, dated August 25, 2009, issued to Baylake Bank
(10)
|
|
10.6
|
ReposiTrak Omnibus Subscription Agreement
(11)
|
|
10.7
|
ReposiTrak Promissory Note
(11)
|
|
10.8
|
Fields Employment Agreement*+
|
|
10.9
|
Services Agreement*+
|
|
14.1
|
Code of Ethics and Business Conduct
(12)
|
|
21
|
List of Subsidiaries
(13)
|
|
23
|
Consent of HJ & Associates, LLC, dated
September 11, 2014
*
|
|
31.1
|
Certification of Principal Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002
|
|
31.2
|
Certification of Principal Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002
|
|
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350
|
(1)
|
Incorporated by reference from our Form 8-K dated September 3, 2008.
|
(2)
|
Incorporated by reference from our Form 8-K dated September 15, 2008.
|
(3)
|
Incorporated by reference from our Form DEF 14C dated June 5, 2002.
|
(4)
|
Incorporated by reference from our Form 10-QSB for the year ended Sept 30, 2005.
|
(5)
|
Incorporated by reference from our Form 10-KSB dated September 29, 2006.
|
(6)
|
Incorporated by reference from our Form 8-K dated June 27, 2007.
|
(7) |
Incorporated by reference from our Form 8-K dated July 21, 2010.
|
(8)
|
Incorporated by reference from our Form 8-K dated September 30, 2009.
|
(9)
|
Incorporated by reference from our Form 8-K dated October 1, 2009.
|
(10)
|
Incorporated by reference from our Form 8-K dated August 25, 2009.
|
(11) | Incorporated by reference from our Annual Report on Form 10-K dated Setpember 23, 2014. |
(12)
(13)
|
Incorporated by reference from our Form 10-KSB dated September 30, 2008.
Incorporated by reference from our Form 10-K dated September 13, 2011.
|
*
|
Filed herewith
|
+ | Due to a clerical error, incorrect copies of these agreements were filed as Exhibits 10.21 and 10.22 to our Annual Report on Form 10-K, dated September 23, 2014. Exhibit 10.8 and 10.9 attached hereto contain true and correct copies of these agreements. |
Date: September 11, 2014
|
By: /s/ Randall K. Fields
|
Principal Executive Officer,
Chairman of the Board and Director
|
Signature
|
Title
|
Date
|
/s/ Randall K. Fields
|
Chairman of the Board and Director,
|
September 11, 2014
|
Randall K. Fields
|
Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ Edward L. Clissold
|
Chief Financial Officer, General Counsel
|
September 11, 2014
|
Edward L. Clissold
|
(Principal Financial Officer &
Principal Accounting Officer)
|
|
/s/ Robert W. Allen
|
Director, and Compensation
|
September 11, 2014
|
Robert W. Allen
|
Committee Chairman
|
|
/s/ James R. Gillis
|
Director
|
September 11, 2014
|
James R. Gillis
|
||
/s/ William S. Kies, Jr.
|
Director
|
September 11, 2014
|
William S. Kies, Jr.
|
||
/s/ Richard Juliano
|
Director
|
September 11, 2014
|
Richard Juliano
|
||
/s/ Austin F. Noll, Jr.
|
Director
|
September 11, 2014
|
Austin F. Noll, Jr.
|
||
/s/ Ronald C. Hodge
|
Director
|
September 11, 2014
|
Ronald C. Hodge
|
Assets
|
June 30, 2014
|
June 30, 2013
|
||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$
|
3,352,559
|
$
|
3,616,585
|
||||
Receivables, net of allowance of $70,000 and $190,000 at June 30, 2014 and 2013, respectively
|
2,857,983
|
2,383,366
|
||||||
Prepaid expense and other current assets
|
250,855
|
403,909
|
||||||
Total current assets
|
6,461,397
|
6,403,860
|
||||||
Property and equipment, net
|
740,753
|
671,959
|
||||||
Other assets:
|
||||||||
Deposits and other assets
|
14,866
|
14,866
|
||||||
Note receivable
|
2,996,664
|
1,622,863
|
||||||
Customer relationships
|
1,918,019
|
2,340,335
|
||||||
Goodwill
|
4,805,933
|
4,805,933
|
||||||
Capitalized software costs, net
|
-
|
73,082
|
||||||
Total other assets
|
9,735,482
|
8,857,079
|
||||||
Total assets
|
$
|
16,937,632
|
$
|
15,932,898
|
||||
Liabilities and Stockholders' Equity (Deficit)
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
738,289
|
$
|
653,655
|
||||
Accrued liabilities
|
1,801,355
|
1,096,982
|
||||||
Deferred revenue
|
1,840,811
|
1,777,326
|
||||||
Line of credit
|
1,200,000
|
1,200,000
|
||||||
Note payable
|
226,900
|
551,421
|
||||||
Total current liabilities
|
5,807,355
|
5,279,384
|
||||||
Long-term liabilities:
|
||||||||
Notes payable, less current portion
|
422,248
|
310,642
|
||||||
Other long-term liabilities
|
88,948
|
101,500
|
||||||
Total liabilities
|
6,318,551
|
5,691,526
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Series B Convertible Preferred stock, $0.01 par value, 30,000,000 shares authorized; 411,927 shares issued and outstanding at June 30, 2014 and 2013
|
4,119
|
4,119
|
||||||
Common stock, $0.01 par value, 50,000,000 shares authorized; 16,928,025 and 16,128,530 issued and outstanding at June 30, 2014 and June 30, 2013, respectively
|
169,280
|
161,285
|
||||||
Additional paid-in capital
|
46,792,736
|
43,314,986
|
||||||
Accumulated deficit
|
(36,347,054
|
) |
(33,239,018
|
) | ||||
Total stockholders' equity
|
10,619,081
|
10,241,372
|
||||||
Total liabilities and stockholders' equity
|
$
|
16,937,632
|
$
|
15,932,898
|
For the Years Ended June 30,
|
||||||||
2014
|
2013
|
|||||||
Revenue:
|
||||||||
Subscriptions
|
$
|
9,398,377
|
$
|
8,025,025
|
||||
Other revenues
|
2,530,039
|
3,293,549
|
||||||
Total revenue
|
11,928,416
|
11,318,574
|
||||||
Operating expenses:
|
||||||||
Cost of revenue and product support
|
5,087,973
|
4,490,438
|
||||||
Sales and marketing
|
4,741,574
|
3,054,361
|
||||||
General and administrative
|
3,812,265
|
2,474,169
|
||||||
Depreciation and amortization
|
879,329
|
901,407
|
||||||
Total operating expense
|
14,521,141
|
10,920,375
|
||||||
(Loss) income from operations
|
(2,592,725)
|
398,199
|
||||||
Other (expense) income:
|
||||||||
Interest income (expense), net
|
102,580
|
(140,712)
|
||||||
(Loss) income before income taxes
|
(2,490,145)
|
257,487
|
||||||
Provision for income taxes | - | - | ||||||
Net (loss) income
|
(2,490,145)
|
257,487
|
||||||
Dividends on preferred stock
|
(617,891)
|
(911,580)
|
||||||
Net loss applicable to common shareholders
|
$
|
(3,108,036)
|
$
|
(654,093)
|
||||
Weighted average shares, basic and diluted
|
16,710,000
|
13,246,000
|
||||||
Basic and diluted loss per share
|
$
|
(0.19)
|
$
|
(0.05)
|
Series A
|
Series B
|
||||||||||||||||||||||||||
Convertible
Preferred Stock
|
Convertible
Preferred Stock
|
Common Stock
|
Additional Paid-In
|
Accumulated
|
|||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|||||||||||||||||||
Balance,
June 30, 2012
|
685,671
|
|
$ |
6,857
|
411,927
|
$
|
4,119
|
12,087,431
|
$
|
120,874
|
$
|
37,763,196
|
$
|
(32,584,925
|
) |
$
|
5,310,121
|
||||||||||
Conversion of Preferred stock
|
(733,605
|
) |
(7,336
|
) |
-
|
-
|
2,445,371
|
24,454
|
(17,118
|
) |
-
|
-
|
|||||||||||||||
Redemption of Preferred stock
|
(2,172
|
) |
(22
|
) |
-
|
-
|
-
|
-
|
(21,698
|
) |
-
|
(21,720
|
) | ||||||||||||||
Stock issued for:
|
|||||||||||||||||||||||||||
Accrued compensation
|
-
|
-
|
-
|
276,988
|
2,770
|
783,573
|
-
|
786,343
|
|||||||||||||||||||
Cash
|
-
|
-
|
-
|
1,288,096
|
12,881
|
4,306,780
|
-
|
4,319,661
|
|||||||||||||||||||
Dividends
|
50,106
|
501
|
-
|
-
|
-
|
500,559
|
-
|
501,060
|
|||||||||||||||||||
Preferred Dividends-Declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(911,580
|
) |
(911,580
|
) | ||||||||||||||||
Exercise of Options/
Warrants
|
-
|
-
|
-
|
-
|
30,644
|
306
|
(306
|
) |
-
|
-
|
|||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
257,487
|
257,487
|
||||||||||||||||||
Balance June 30, 2013
|
-
|
-
|
411,927
|
4,119
|
16,128,530
|
161,285
|
43,314,986
|
(33,239,018
|
) |
10,241,372
|
|||||||||||||||||
Stock issued for:
|
|||||||||||||||||||||||||||
Accrued compensation
|
-
|
- |
|
-
|
-
|
312,364
|
3,124
|
1,104,574
|
-
|
1,107,698
|
|||||||||||||||||
Cash
|
-
|
-
|
-
|
-
|
277,092
|
2,771
|
1,644,922
|
-
|
1,647,693
|
||||||||||||||||||
Charitable Contribution
|
-
|
-
|
-
|
-
|
15,000
|
150
|
96,750
|
-
|
96,900
|
||||||||||||||||||
Preferred Dividends-Declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(617,891
|
) |
(617,891
|
) | ||||||||||||||||
Exercise of Options/Warrants
|
-
|
-
|
-
|
-
|
195,039
|
1,950
|
631,504
|
-
|
633,454
|
||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,490,145
|
) |
(2,490,145
|
) | ||||||||||||||||
Balance,
June 30, 2014
|
-
|
|
$ |
-
|
411,927
|
$
|
4,119
|
16,928,025
|
$
|
169,280
|
$
|
46,792,736
|
$
|
(36,347,054
|
) | $ |
10,619,081
|
For the Years Ended June 30,
|
||||||||
2014
|
2013
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net (loss) income
|
$
|
(2,490,145)
|
$
|
257,487
|
||||
Adjustments to reconcile net (loss) income to net cash used in by operating activities:
|
||||||||
Depreciation and amortization
|
879,329
|
901,407
|
||||||
Bad debt expense
|
186,740
|
144,617
|
||||||
Stock compensation expense
|
1,719,375
|
843,645
|
||||||
Stock issued for charity
|
96,900
|
- | ||||||
Decrease (increase) in:
|
||||||||
Trade receivables
|
(661,357)
|
(1,859,987)
|
||||||
Prepaids and other assets
|
(20,747)
|
(226,552)
|
||||||
Increase (decrease) in:
|
||||||||
Accounts payable
|
84,634
|
102,809
|
||||||
Accrued liabilities
|
49,252
|
(8,357)
|
||||||
Deferred revenue
|
63,485
|
(304,133)
|
||||||
Net cash used in operating activities
|
(92,534)
|
(149,064)
|
||||||
Cash Flows From Investing Activities:
|
||||||||
Purchase of property and equipment
|
(459,230)
|
(445,744)
|
||||||
Cash advanced on Note Receivable
|
(1,200,000)
|
-
|
||||||
Cash from sale of property & equipment
|
6,505
|
-
|
||||||
Net cash used in investing activities
|
(1,652,725)
|
(445,744)
|
||||||
Cash Flows From Financing Activities:
|
||||||||
Proceeds from issuance of stock
|
1,493,818
|
4,162,920
|
||||||
Proceeds from exercises of options and warrants
|
633,454
|
- | ||||||
Proceeds from issuance of note payable
|
338,287
|
176,797
|
||||||
Proceeds from employee stock plans
|
153,875
|
156,741
|
||||||
Series A redemption
|
-
|
(21,720)
|
||||||
Dividends paid
|
(586,999)
|
(503,311)
|
||||||
Payments on notes payable and capital leases
|
(551,202)
|
(866,210)
|
||||||
Net cash provided by financing activities
|
1,481,233
|
3,105,217
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(264,026)
|
2,510,409
|
||||||
Cash and cash equivalents at beginning of period
|
3,616,585
|
1,106,176
|
||||||
Cash and cash equivalents at end of period
|
$
|
3,352,559
|
$
|
3,616,585
|
||||
Supplemental Disclosure of Cash Flow Information
|
||||||||
Cash paid for income taxes
|
$
|
6,634
|
$
|
-
|
||||
Cash paid for interest
|
$
|
75,343
|
$
|
142,491
|
||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities
|
||||||||
Common Stock to pay accrued liabilities
|
$
|
1,107,698
|
$
|
786,343
|
||||
Dividends accrued on preferred stock
|
$
|
617,891
|
$
|
911,580
|
||||
Dividends paid with preferred stock
|
$
|
-
|
$
|
501,060
|
||||
Conversion of accounts receivable into notes receivable
|
$
|
-
|
$
|
1,622,863
|
NOTE 1.
|
DESCRIPTION OF BUSINESS
|
NOTE 2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Years
|
||||
Furniture and fixtures
|
5-7
|
|||
Computer Equipment
|
3
|
|||
Equipment under capital leases
|
3
|
|||
Leasehold improvements
|
See below
|
Years
|
||||
Customer relationships
|
10
|
|||
Acquired developed software
|
5
|
|||
Developed software
|
3
|
|||
Goodwill
|
See below
|
Year ended
June 30, 2014
|
Year ended
June 30, 2013
|
|||||||
Dilutive effect of options and warrants
|
-
|
-
|
||||||
Weighted average shares outstanding assuming dilution
|
16,710,000
|
13,246,000
|
Warrants Outstanding
at June 30, 2014
|
Warrants Exercisable
at June 30, 2014
|
|||||||||||||||||||||
Range of exercise prices
|
Number Outstanding
|
Weighted average remaining contractual life (years)
|
Weighted average exercise price
|
Number exercisable
|
Weighted average exercise price
|
|||||||||||||||||
$
|
3.50-3.60
|
240,629
|
3.71
|
$
|
3.56
|
240,629
|
$
|
3.56
|
||||||||||||||
$
|
6.45
|
76,744
|
4.16
|
$ |
6.45
|
76,744
|
$ |
6.45
|
||||||||||||||
317,373
|
3.82
|
$
|
4.26
|
317,373
|
$
|
4.26
|
NOTE 3.
|
LIQUIDITY AND WORKING CAPITAL
|
NOTE 4.
|
RECEIVABLES
|
2014
|
2013
|
|||||||
Accounts receivable
|
$
|
2,927,983
|
$
|
2,573,366
|
||||
Allowance for doubtful accounts
|
(70,000
|
) |
(190,000
|
) | ||||
$
|
2,857,983
|
$
|
2,383,366
|
NOTE 5.
|
PROPERTY AND EQUIPMENT
|
2014
|
2013
|
|||||||
Computer equipment
|
$
|
2,899,867
|
$
|
2,444,129
|
||||
Furniture and fixtures
|
260,574
|
321,281
|
||||||
Leasehold improvements
|
231,782
|
231,782
|
||||||
3,392,223
|
2,997,192
|
|||||||
Less accumulated depreciation and amortization
|
(2,651,470
|
) |
(2,325,233
|
) | ||||
$
|
740,753
|
$
|
671,959
|
NOTE 6.
|
CAPITALIZED SOFTWARE COSTS
|
2014
|
2013
|
|||||||
Capitalized software costs
|
$
|
2,443,128
|
$
|
2,443,128
|
||||
Less accumulated amortization
|
(2,443,128
|
) |
(2,370,046
|
) | ||||
$
|
-
|
$
|
73,082
|
NOTE 7.
|
CUSTOMER RELATIONSHIPS
|
2014
|
2013
|
|||||||
Customer relationships
|
$
|
4,223,161
|
$
|
4,223,161
|
||||
Less accumulated amortization
|
(2,305,142
|
) |
(1,882,826
|
) | ||||
$
|
1,918,019
|
$
|
2,340,335
|
Year ending June 30:
|
||||
2015
|
$ |
422,316
|
||
2016
|
$ |
422,316
|
||
2017
|
$ |
422,316
|
||
2018
|
$ |
422,316
|
||
2019
|
$ |
228,755
|
||
Thereafter
|
$ |
-
|
NOTE 8.
|
ACCRUED LIABILITIES
|
2014
|
2013
|
|||||||
Accrued stock-based compensation
|
$
|
1,122,188
|
$
|
497,012
|
||||
Accrued compensation
|
352,764
|
295,377
|
||||||
Accrued other liabilities
|
171,930
|
176,892
|
||||||
Accrued dividends
|
154,473
|
123,578
|
||||||
Accrued interest
|
-
|
4,123
|
||||||
$
|
1,801,355
|
$
|
1,096,982
|
NOTE 9.
|
NOTES PAYABLE
|
NOTE 10.
|
LINES OF CREDIT
|
NOTE 11.
|
DEFERRED REVENUE
|
2014
|
2013
|
|||||||
Subscription
|
$
|
855,462
|
725,852
|
|||||
Maintenance and support
|
886,518
|
946,759
|
||||||
Consulting and other
|
98,831
|
104,715
|
||||||
$
|
1,840,811
|
$
|
1,777,326
|
NOTE 12.
|
INCOME TAXES
|
2014
|
2013
|
|||||||
Deferred tax assets:
|
||||||||
NOL Carryover
|
$
|
45,484,720
|
$
|
44,760,272
|
||||
Depreciation
|
- |
-
|
||||||
Amortization
|
- |
-
|
||||||
Allowance for Bad Debts
|
27,300
|
74,100
|
||||||
Accrued Expenses
|
455,041
|
199,977
|
||||||
Deferred Revenue
|
283,900
|
396,086
|
||||||
Deferred tax liabilities:
|
||||||||
Depreciation
|
(120,626)
|
(97,517
|
)
|
|||||
Amortization
|
(392,137)
|
(348,847
|
)
|
|||||
Valuation allowance
|
(45,738,198)
|
(44,984,071
|
)
|
|||||
Net deferred tax asset
|
$
|
- |
$
|
-
|
2014
|
2013
|
|||||||
Book Income
|
$
|
(971,157
|
) |
$
|
100,420
|
|||
Stock for Services
|
(21,650
|
) |
149,651
|
|||||
Life Insurance
|
30,390
|
27,098
|
||||||
Meals & Entertainment
|
12,793
|
10,277
|
||||||
Change in deferred revenue
|
(112,186
|
) |
36,064
|
|||||
Change in accrual and Allowance
|
208,264
|
(37,153
|
) | |||||
Change in depreciation
|
(52,340
|
) |
(99,084
|
) | ||||
NOL utilization
|
- |
|
(187,273
|
) | ||||
Valuation allowance
|
905,886
|
-
|
||||||
$
|
- |
$
|
-
|
NOTE 13.
|
COMMITMENTS AND CONTINGENCIES
|
NOTE 14.
|
EMPLOYEEE BENEFIT PLAN
|
NOTE 15.
|
STOCK COMPENSATION PLAN
|
●
|
Annual cash compensation of $10,000 payable at the rate of $2,500 per quarter. The Company has the right to pay this amount in the form of shares of the Company’s common stock.
|
●
|
Upon appointment, outside independent directors receive a grant of $150,000 payable in shares of the Company’s restricted Common Stock calculated based on the market value of the shares of Common Stock on the date of grant. The shares vest ratably over a five-year period.
|
●
|
Reimbursement of all travel expenses related to performance of Directors’ duties on behalf of the Company.
|
Number of Options
|
Number of Warrants
|
Price per share
|
||||||||||
Outstanding at June 30, 2012 | 12,880 | 50,000 | $ | 1.50-1.80 | ||||||||
Granted
|
- | 424,763 | $ | 3.50-3.60 | ||||||||
Exercised
|
- | (30,644 | ) | $ | 1.80 | |||||||
Cancelled
|
(580 | ) | (19,356 | ) | $ | 1.80-2.50 | ||||||
Expired
|
- | - | $ | - | ||||||||
Outstanding at June 30, 2013
|
12,300
|
424,763
|
$
|
1.50-3.60
|
||||||||
Granted
|
-
|
76,744
|
$ |
6.45
|
||||||||
Exercised
|
(12,300
|
) |
(184,134
|
) | $ |
1.50-3.60
|
||||||
Cancelled
|
-
|
-
|
$ |
-
|
||||||||
Expired
|
-
|
-
|
$ |
-
|
||||||||
Outstanding at June 30, 2014
|
-
|
317,373
|
$
|
3.50-6.45
|
NOTE 16.
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
1.
|
Identify contract with customer;
|
2.
|
Identify the performance obligations in the contract;
|
3.
|
Determine the transaction price;
|
4.
|
Allocate the transaction price to the performance obligations in the contract; and
|
5.
|
Recognize revenue when the performance obligation is satisfied.
|
NOTE 17.
|
RELATED PARTY TRANSACTIONS
|
NOTE 18.
|
SUBSEQUENT EVENTS
|
|
B.
|
This Agreement is made to protect the Company’s legitimate and legally protectible property and business interests.
|
|
C.
|
This Agreement is entered into as a term and condition of Employee’s continued employment with the Company.
|
|
D.
|
Employee’s recent contract expired June 30, 2013 and due to the performance of Employee, particularly in his ability to perform multiple functions and due to the fact that there have been only minor changes in his amount of compensation, the parties now desire to enter into a new contract and make adjustments to the salary paid to more accurately compensate for the work being performed.
|
“Company”
Park City Group, Inc.
, a Nevada corporation
By:
/s/ Edward L. Clissold
Name: Edward L. Clissold
Title: Chief Financial Officer
|
“Employee”
/s/ Randall K. Fields
Name: Randall K. Fields
|
|
A.
|
Fields is a corporation in the business of providing executive management services, including performing the functions of President and Chief Executive Officer for the Company.
|
|
B.
|
This Agreement is made to protect the Company’s legitimate and legally protectible property and business interests.
|
|
C.
|
This Agreement is entered into in order to define the terms and conditions of Fields’ relationship with the Company.
|
|
D.
|
The current Services Agreement between the parties dated April 9, 2009 expired on June 30, 2013 and due to the performance of the Executive, particularly in his ability to perform multiple functions and due to the fact that there have been only minor changes in the amount of fees charged by Fields, the parties now desire to continue their business relationship and make adjustments to the fees paid to more accurately compensate for the work being performed.
|
“Company”
Park City Group, Inc.
, a Nevada corporation
By:
/s/ Edward L. Clissold
Name: Edward L. Clissold
Title: Chief Financial Officer
|
“Fields”
FIELDS MANAGEMENT, INC.,
a Utah corporation
By:
/s/ Randall K. Fields
Name: Randall K. Fields
Title: President
|
1.
|
I have reviewed this annual report on Form 10-K for the period ended June 30, 2014 of Park City Group, Inc.;
|
2.
|
Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
|
b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Randall K. Fields
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1.
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I have reviewed this annual report on Form 10-K for the period ended June 30, 2014 of Park City Group, Inc.;
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2.
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Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Edward L. Clissold
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1.
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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/s/ Randall K. Fields
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/s/ Edward L. Clissold
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