Park City Group, Inc. — Form 10-Q Summary
Issuer and period: The supplied filing identifies the issuer as Park City Group, Inc., not Repositrak, Inc. It reports the fiscal quarter and six months ended December 31, 2011; the statements are unaudited. The company describes itself as a SaaS provider of supply-chain software and related services.
Financial performance
| Metric | Three months ended Dec. 31, 2011 | Six months ended Dec. 31, 2011 |
|---|---|---|
| Revenue | $2.57 million, down 6.6% year over year | $5.15 million, down 3.1% |
| Operating income (loss) | $(128,478), versus $269,242 income | $(334,709), versus $65,639 income |
| Net income (loss) | $(175,872), versus $184,555 income | $(455,593), versus $(117,538) |
| Net loss applicable to common shareholders | $(384,739), or $(0.03) per share | $(872,813), or $(0.07) per share |
Subscription revenue increased 5.4% for the quarter and 8.8% for the six-month period. Maintenance, professional services, and software-license revenue declined in both comparisons. Cost of services and product support rose 22.7% for the quarter and 25.3% for the six months, reaching 43.4% and 43.8% of revenue, respectively. Those figures imply lower service gross contribution as a share of revenue than in the prior-year periods. Operating expenses totaled $2.70 million for the quarter and $5.48 million for six months.
Six-month operating cash flow was $391,860, down from $640,656; investing cash use was $54,318, compared with $222,024. Financing activities used $2.01 million, principally reflecting debt repayments and dividends. Cash fell to $942,327 from $2.62 million at June 30, 2011. No income-tax provision or benefit was reported.
Financial position and material changes
At December 31, 2011, current assets were $2.68 million and current liabilities were $5.32 million, yielding negative working capital of $2.64 million. Total liabilities were $6.28 million. Borrowings, including the $1.2 million bank line but excluding capital leases, were $3.17 million; the filing classifies 57% as variable-rate and 43% as fixed-rate debt. The bank line’s maturity was extended to September 30, 2012. Capital-lease obligations totaled approximately $83,000.
The company retired approximately $1.5 million of Prescient acquisition notes during the period, contributing to a roughly $2.4 million reduction in total liabilities versus June 30, 2011. Remaining Prescient Notes of $249,700, plus accrued interest, were paid January 12, 2012. On February 8, 2012, the company entered into a bank promissory note providing for advances up to $350,000, subject to the stated conversion and interest terms.
Outlook, risks, and other disclosures
Management expects subscription revenue to continue growing year over year and anticipates annual subscription attrition of approximately 5%, including in the year ending June 30, 2012. It expects subscription revenue to form a larger share of sales, while license and maintenance revenue may decline or remain volatile. License sales and professional-services revenue are described as difficult to predict.
Management believes cash resources and projected operating cash flow will cover operations and debt service for at least the next 12 months, and intends to use cash flow to reduce debt and may refinance or restructure obligations. It cautions that these plans are not assured; insufficient cash flow or inability to refinance could require additional financing, which may not be available on favorable terms or at all. The filing reports no ongoing legal proceedings and no material changes to previously disclosed risk factors. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Most important facts for investors to verify
- Confirm the intended company: this filing is for Park City Group, Inc., although the request names Repositrak, Inc.
- Track subscription growth against customer non-renewals and the forecast 5% annual attrition.
- Assess liquidity and upcoming debt maturities against cash, operating cash flow, and the availability and use of the additional $350,000 bank facility.
- Monitor whether higher service costs and lower total revenue continue to pressure operating results.
- Review the preferred-stock dividend burden: $417,220 accrued in the six-month period, including Series B’s stated 12% annual dividend.