☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2016
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to
_________.
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Nevada
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37-1454128
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(State or other jurisdiction of incorporation or
organization)
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(IRS Employer Identification No.)
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299
South Main Street, Suite 2370 Salt Lake City,
UT 84111
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(Address of principal executive offices)
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(435)
645-2000
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(Registrant's telephone number)
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Page
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PART I - FINANCIAL INFORMATION
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1
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2
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3
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4
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5
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9
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16
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17
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PART II – OTHER INFORMATION
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18
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18
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18
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18
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18
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18
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18
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Assets
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September 30,
2016
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June 30,
2016
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Current
Assets:
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(unaudited)
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Cash
and cash equivalents
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$11,385,641
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$11,443,388
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Receivables,
net of allowance of $150,000 and $75,000 at September 30, 2016 and
June 30, 2016, respectively
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4,655,527
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3,547,968
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Prepaid
expense and other current assets
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320,068
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393,275
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Total
current assets
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16,361,236
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15,384,631
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Property
and equipment, net
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401,454
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469,383
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Other
assets:
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Deposits
and other assets
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14,866
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14,866
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Investments
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471,584
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471,584
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Customer
relationships
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1,149,750
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1,182,600
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Goodwill
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20,883,886
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20,883,886
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Capitalized
software costs, net
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182,942
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182,942
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Total
other assets
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22,703,028
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22,735,878
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Total
assets
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$39,465,718
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$38,589,892
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Liabilities and Stockholders' Equity (Deficit)
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Current
liabilities:
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Accounts
payable
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$570,059
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$580,309
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Accrued
liabilities
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1,284,588
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1,502,203
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Deferred
revenue
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2,639,896
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2,717,094
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Lines
of credit
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2,500,000
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2,500,000
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Current
portion of notes payable
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218,118
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239,199
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Total
current liabilities
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7,212,661
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7,538,805
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Long-term
liabilities:
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Notes
payable, less current portion
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445,753
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491,253
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Other
long-term liabilities
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53,429
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57,275
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Total
liabilities
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7,711,843
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8,087,333
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Commitments
and contingencies
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Stockholders'
equity:
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Series
B Preferred stock, $0.01 par value, 700,000 shares authorized;
625,375 shares issued and outstanding at September 30, 2016 and
June 30, 2016
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6,254
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6,254
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Series
B-1 Preferred stock, $0.01 par value, 300,000 shares authorized;
208,224 and 180,213 shares issued and outstanding at September 30,
2016 and June 30, 2016, respectively
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2,082
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1,802
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Common
stock, $0.01 par value, 50,000,000 shares authorized; 19,309,832
and 19,229,313 issued and outstanding at September 30, 2016 and
June 30, 2016, respectively
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193,101
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192,296
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Additional
paid-in capital
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74,095,202
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73,272,620
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Accumulated
deficit
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(42,542,764)
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(42,970,413)
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Total
stockholders’ equity
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31,753,875
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30,502,559
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Total
liabilities and stockholders’ equity
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$39,465,718
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$38,589,892
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Three
Months Ended
September
30,
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2016
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2015
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Revenues:
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$4,216,545
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$3,098,631
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Operating
expenses:
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Cost of services and product support
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1,203,515
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1,174,546
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Sales and marketing
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1,193,176
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1,442,572
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General and administrative
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1,023,150
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772,494
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Depreciation and amortization
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116,580
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129,098
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Total
operating expenses
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3,536,421
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3,518,710
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Income
(loss) from operations
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676,399
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(420,079)
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Other
expense:
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Interest (expense) income
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(6,487)
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17,623
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Income
(loss) before income taxes
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673,637
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(402,456)
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(Provision)
benefit for income taxes:
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(59,184)
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(4,836)
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Net
income (loss)
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614,453
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(407,292)
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Dividends
on preferred stock
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(186,804)
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(199,388)
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Net
income (loss) applicable to common shareholders
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$427,649
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$(606,680)
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Weighted
average shares, basic
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19,266,000
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19,042,000
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Weighted
average shares, diluted
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20,099,000
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19,042,000
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Basic
income (loss) per share
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$0.02
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$(0.03)
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Diluted
income (loss) per share
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$0.02
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$(0.03)
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Three
Months Ended
September 30,
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2016
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2015
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Net
income (loss) applicable to common shareholders
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$427,649
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$(606,680)
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Other
comprehensive income (loss):
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Unrealized loss on marketable securities
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-
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(3,554)
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Comprehensive
income (loss)
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$427,649
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$(610,234)
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Three
Months Ended
September
30,
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2016
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2015
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Cash
Flows Operating Activities:
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Net
income (loss)
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$614,453
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$(407,292)
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Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
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Depreciation
and amortization
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116,580
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129,098
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Stock
compensation expense
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239,056
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261,833
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Bad
debt expense
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80,700
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33,576
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(Increase)
decrease in:
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Trade
receivables
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(1,188,259)
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(192,273)
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Prepaids
and other assets
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73,207
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(3,726)
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(Decrease)
increase in:
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Accounts
payable
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(10,250)
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178,505
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Accrued
liabilities
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30,002
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(51,968)
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Deferred
revenue
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(77,198)
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(99,057)
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Net
cash used in operating activities
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(121,709)
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(151,304)
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Cash
Flows Investing Activities:
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Purchase
of property and equipment
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(15,800)
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(18,586)
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Purchase
of marketable securities
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-
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(4,639,036)
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Net
cash used in investing activities
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(15,800)
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(4,657,622)
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Cash
Flows Financing Activities:
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Proceeds
from employee stock plans
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113,987
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98,976
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Proceeds
from exercise of warrants
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35,000
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-
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Dividends
paid
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(2,644)
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(2,644)
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Payments
on notes payable and capital leases
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(66,581)
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(55,894)
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Net
cash provided by financing activities
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79,762
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40,438
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Net
decrease in cash and cash equivalents
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(57,747)
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(4,768,488)
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Cash
and cash equivalents at beginning of period
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11,443,388
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11,325,572
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Cash
and cash equivalents at end of period
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$11,385,641
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$6,557,084
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Supplemental
Disclosure of Cash Flow Information:
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Cash
paid for income taxes
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$59,184
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$4,836
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Cash
paid for interest
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$11,223
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$8,680
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Supplemental
Disclosure of Non-Cash Investing and Financing
Activities:
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Preferred
Stock to pay accrued liabilities
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$100,000
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$-
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Common
Stock to pay accrued liabilities
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$394,570
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$987,885
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Dividends
accrued on preferred stock
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$186,804
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$199,388
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Dividends
paid with preferred stock
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$180,110
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$-
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Three
Months Ended
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September
30,
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2016
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2015
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Diluted
effect of warrants
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832,581
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-
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Weighted
average shares outstanding assuming dilution
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20,099,041
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19,042,000
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Restricted
Stock Units
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Weighted
Average Grant Date Fair Value ($/share)
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Outstanding
at June 30, 2016
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1,051,144
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5.82
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Granted
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29,578
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9.13
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Vested
and issued
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(53,637)
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7.04
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Forfeited
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(23,246)
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10.52
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Outstanding
at September 30, 2016
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1,003,839
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$5.74
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Warrants
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Warrants
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Outstanding
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Exercisable
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at
September 30, 2016
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at September 30,
2016
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Range of
exercise prices
Warrants
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Number
outstanding at
September 30, 2016
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Weighted average remaining contractual life
(years)
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Weighted
average exercise price
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Number
exercisable at
September 30, 2016
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Weighted average exercise price
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$3.50–4.00
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1,306,268
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3.03
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$3.93
|
1,306,268
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$3.93
|
$6.45–10.00
|
100,481
|
2.24
|
$7.29
|
100,481
|
$7.29
|
|
1,406,749
|
2.97
|
$4.17
|
1,406,749
|
$4.17
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|
Fiscal Quarter Ended
September 30,
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Variance
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2016
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2015
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Dollars
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Percent
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Revenues
|
4,216,545
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$3,098,631
|
$1,117,914
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36%
|
|
Fiscal Quarter Ended
September
30,
|
Variance
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2016
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2015
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Dollars
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Percent
|
Cost
of services and product support
|
$1,203,515
|
$1,174,546
|
$28,969
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2%
|
Percent
of total revenue
|
29%
|
38%
|
|
|
|
Fiscal Quarter Ended
September 30,
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Variance
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|
2016
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2015
|
Dollars
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Percent
|
Sales
and marketing
|
$1,193,176
|
$1,442,572
|
$(249,396)
|
-17%
|
Percent
of total revenue
|
28%
|
47%
|
|
|
|
Fiscal Quarter Ended
September
30,
|
Variance
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||
|
2016
|
2015
|
Dollars
|
Pecent
|
General
and administrative
|
$1,023,150
|
$772,494
|
$250,656
|
32%
|
Percent
of total revenue
|
24%
|
25%
|
|
|
|
Fiscal Quarter Ended
September
30,
|
Variance
|
||
|
2016
|
2015
|
Dollars
|
Percent
|
Depreciation
and amortization
|
$116,580
|
$129,098
|
$(12,518)
|
-10%
|
Percent
of total revenue
|
3%
|
4%
|
|
|
|
Fiscal Quarter
Ended
September 30,
|
Variance
|
||
|
2015
|
2015
|
Dollars
|
Percent
|
Interest
(expense) income
|
$(6,487)
|
$17,623
|
$(24,110)
|
-137%
|
Percent
of total revenue
|
<1
%
|
1%
|
|
|
|
Fiscal Quarter Ended
September
30,
|
Variance
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||
2016
|
2016
|
2015
|
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Percent
|
Preferred
dividends
|
$186,804
|
$199,388
|
$(12,584)
|
-6%
|
Percent
of total revenue
|
4%
|
6%
|
|
|
|
As
of September 30,
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Variance
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2016
|
2015
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Dollars
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Percent
|
Cash
and cash equivalents
|
$11,385,641
|
$6,557,084
|
$4,828,557
|
74%
|
|
Three Months Ended
September 30,
|
Variance
|
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|
2016
|
2015
|
Dollars
|
Percent
|
Cash
used in operating activities
|
$(121,709)
|
$(151,304)
|
$29,595
|
20%
|
|
Three Months Ended
September 30,
|
|
|
2016
|
2015
|
Net
income (loss)
|
$614,453
|
$(407,292)
|
Noncash
expense and income, net
|
436,335
|
424,507
|
Net
changes in operating assets and liabilities
|
(1,172,497)
|
(168,519)
|
|
$(121,709)
|
$(151,304)
|
|
Three Months Ended
September 30,
|
Variance
|
||
|
2016
|
2015
|
Dollars
|
Percent
|
Cash
used in investing activities
|
$(15,800)
|
$(4,657,622)
|
$4,641,822
|
100%
|
|
Three Months Ended
|
Variance
|
||
|
September 30,
|
|
|
|
|
2016
|
2015
|
Dollars
|
Percent
|
Cash
provided by financing activities
|
$79,762
|
$40,438
|
$39,324
|
97%
|
|
As of
September 30,
|
As of June 30,
|
Variance
|
|
|
2016
|
2015
|
Dollars
|
Percent
|
Current
assets
|
$16,361,236
|
$15,384,631
|
$976,605
|
6%
|
|
As of
September 30,
|
As of
June
30
|
Variance
|
|
|
2016
|
2016
|
Dollars
|
Percent
|
Current
liabilities
|
$7,212,661
|
$7,538,805
|
$326,144
|
4%
|
|
September 30,
|
|
|
2016
(unaudited)
|
Percent of
Total Debt
|
Fixed
rate debt
|
$663,871
|
21%
|
Variable
rate debt
|
2,500,000
|
79%
|
Total
debt
|
$3,163,871
|
100%
|
Cash:
|
Aggregate
Fair Value
|
Weighted Average Interest Rate
|
Cash
|
$11,385,641
|
0.2%
|
Date:
November 7, 2016
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PARK CITY GROUP, INC.
|
|
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By:
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/s/ Randall
K. Fields
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Randall K. Fields
Chief Executive Officer, Chairman and Director
(Principal Executive Officer)
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Date: November
7, 2016
|
By:
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/s/ Todd
Mitchell
|
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|
Todd Mitchell
Chief Financial Officer
(Principal Financial Officer & Principal Accounting
Officer)
|
Park City Group, Inc., a Nevada
corporation
|
FIELDS MANAGEMENT,
INC., a Utah corporation
|
|
|
/s/ Edward Clissold
|
By: /s/Randall K.
Fields
|
|
|
Name, Title:
Edward Clissold, General
Counsel
|
Name: Randall K.
Fields, President
|
|
|
|
/s/Randall K.
Fields
Randall K.
Fields
|
|
|
|
|
(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 me by others within those entities,
particularly during the period in which this report is being
prepared;
|
(b) Designed such internal control
over financial reporting, or caused such internal control over
financial reporting to be designed under my 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;
|
(c) 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
|
(d) Disclosed in this report any
change in the registrant's internal control over financing
reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
|
(a) All significant deficiencies and
material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and
report financial information; and
|
(b) 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.
|
Date: November 7, 2016
|
By:
|
/s/ Randall K.
Fields
Randall K. Fields
Chief Executive Officer, Chairman and Director
(Principal Executive Officer)
|
(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 me by others within those entities,
particularly during the period in which this report is being
prepared;
|
(b) Designed such internal control
over financial reporting, or caused such internal control over
financial reporting to be designed under my 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;
|
(c) 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
|
(d) Disclosed in this report any
change in the registrant's internal control over financing
reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
|
(a) All significant deficiencies and
material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and
report financial information; and
|
(b) 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.
|
Date: November 7, 2016
|
By:
|
/s/
Todd Mitchell
Todd Mitchell
Chief Financial Officer
(Principal Financial Officer & Principal Accounting
Officer)
|
Date: November 7, 2016
|
By:
|
/s/ Randall
K. Fields
Randall K. Fields
Chief Executive Officer, Chairman and Director
(Principal Executive Officer)
|
Date: November 7, 2016
|
By:
|
/s/
Todd Mitchell
Todd Mitchell
Chief Financial Officer
(Principal Financial Officer & Principal Accounting
Officer)
|