Pcyg investor presentation mwic

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NYSE MKT: PCYGwww.parkcitygroup.com

Investor Presentation2013 Midwest IDEAS Conference

22 Sell More – Stock Less – See Everything

Forward-Looking Statement

Statements in this presentation that relate to Park City Group's future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Those factors could include changes in economic conditions that may change demand for the Company's products and services and other factors discussed in the "forward-looking information" section and the "risk factor" section of the management's discussion and analysis included in the Company's report on Form 10-K and 10-Q or current reports on Form 8-K filed with the Securities and Exchange Commission. This presentation is comprised of interrelated information that must be interpreted in the context of all of the information provided and care should be exercised not to consider portions of this presentation out of context. Park City Group uses paid services of investor relations organizations to promote the Company to the investment community. Investments in any company should be considered speculative and prior to acquisition, should be thoroughly researched. Park City Group does not intend to update these forward-looking statements prior to announcement of quarterly or annual results.


Sell More, Stock Less, See Everything

Customer Value Proposition> Reduced out-of-stocks = Increase in sales 4% to 6%> Lower Inventories / working capital – 10% to 30%> Increased margins – reduced labor and check-in time> Improve food & drug safety - Track & Trace food and drugs

PCG is a cloud-based, big data software company that detects, exposes and solves sales, inventory and product problems in the global food and drug supply chainSupplier

Supplier

Distributor Wholesaler Retailer Customer

Downstream

Upstream


Park City Group Investment Highlights> Recurring revenue streams with multi-year

visibility – ~90%+ customer retention rate gives strong earnings visibility.

> Generating significant positive cash flow… Significant operating leverage with 75%+ incremental margin. No need to raise capital.

> Accelerating growth & strong balance Sheet– in both revenue and EPS due to recent national account wins.

> Strong competitive advantage – 16 years of development and ~$125 million of invested capital in propriety platform.

> ReposiTrak™ partnership is well positioned to become the standard for tracking and tracing food and drugs in the global supply chain.

> Influential board of directors and experienced management team – current and former grocery, retailing, consumer products, dairy, and magazine industry senior executives.

NYSE MKT: PCYG Headquarters: Salt Lake City, Utah

Recent Price (8/21/13) $6.48 52-Week Range $2.71 -$8.38 Shares Outstanding 16.1 MM Fully Diluted Shares 17.6 MM Market Capitalization $141.9 MM TTM Revenue $10.9 MM

TTM Adjusted-EBITDA $2.6 MMOwnership

~40% Insider Ownership


The Central Issue in the Grocery Industry Today…

• 50% will purchase at a competitor, up 20% from six years ago

• 38% won’t purchase the item at all, an increase of 30% from six years ago

• 12% will switch brands, down 15% from six years ago

Source: Progressive Grocer “Out-of-Stocks Greatest Influencer of Trip Satisfaction”: Study by Retail Feedback Group , October 16, 2012

… is eliminating out-of-stocks!

When shoppers can’t find what they want…


What’s Causing the Out-of-Stocks?

Today’s supply chain is broken, using delivery history as the basis for replenishing products…even if it was WRONG!

The consumer is faced with substitution or going elsewhere

Supply doesn’t match demand

Forecasting is based on what was delivered last time, and available space to hold it

Consumer | Retailer | Retailer Distribution | Supplier Distribution | Supplier Plant

Mistakes in manufacturing quantities are repeated

Product is pushed into the supply chain based on inaccurate forecasted sales


Park City Group Solves the Out-of-Stock Problem…

PCG’s solutions work along the entire supply chain to ensure the product is available for the consumer by using consumer demand through point-of-sale data to drive downstream replenishment and manufacturing

The consumer is THE best demand signal

Exposing and solving out-of-stocks will increase sales

Improving forecast accuracy will reduce inventory levels and increase order fill rates

Consumer | Retailer | Retailer Distribution | Supplier Distribution | Supplier Plant

Smoothing the demand allows more efficient manufacturer planning

…at each level of the supply chain by pulling the right amount of product through


Park City Group Solutions> Provide greater visibility into consumer demand> Turn data into actionable information across the entire supply chain> Enable collaboration between the Retailer and the Supplier (“collaborative

commerce”)

Customer Value Proposition> Reduced out-of-stocks = Increase in sales 4% to 6%> Lower Inventories / working capital – 10% to 30%> Increased margins through greater logistic efficiency, inventory accuracy

and less promotional spending

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Evidence of PCG Effectiveness

PCG growth opportunities

OOS = Out-of-stock

Sell More – Stock Less – See Everything

PCG dominant in these categories


Leveraging PCG’s Proven Technology Platform…

More foods are being imported (80% of seafood)

Fewer inspections occurring (less than 2% of imported seafood is being inspected)

Greater awareness of Food & Drug Safety (over 237 recalls in calendar 2012)

…to address the growing importance of food and drug safety


Why Do Food & Drug Companies Care?

Regulator Risk – New food and drug safety lawFinancial Risk – Food is the next tobacco for litigatorsBrand Risk – Loss of confidence in the brand

The new Food Safety Modernization Act is 2,000 pages and growing…

Marler is reportedly seeking $100 million in damages from Walmart and others in the cantaloupe supply chain. The potential for litigation plays a major role in retailers changing their food supply system.

-Bill Marler, Attorney for 37 clients in Jensen Farms Litigation, June 2012


ReposiTrak™-Global Food and Drug Track & Trace System

Michael O. Leavitt – former U.S. Secretary of Health and Human Services, and Administrator of the Environmental Protection Agency and 3-time governor of Utah

Dr. David Acheson – former FDA Associate Commissioner of Foods, former Chief Medical Officer at the FDA's Center for Food Safety & Applied Nutrition (CFSAN)

Park City Group joins with Leavitt Partners to create ReposiTrak

Park City Groups brings proven technology

Leavitt Partners brings thought leadership in the fields of food and drug safety

16 years and $125 million of invested Capital Processes millions of transactions per day


ReposiTrak™-Global Food and Drug Track & Trace System …Provides opportunity to accelerate growth of PCG’s existing hub and spoke network…• Tracks and traces products and components to products

throughout the food, drug and dietary supplement supply chains • Receives, stores, shares, and maintains regulatory documentation

all in one convenient location • Near real-time identification of the supply chain path taken by

recalled products • Strong retailer and supplier value proposition

• Inexpensive to use ($100 per month per participant)• Several million possible participants

• Compliance with food and drug safety law• Reduces litigation risk• Provides point of differentiation for early adopters


Rapidly Becoming the Standard for…

Initial retail, wholesaler and supplier implementations began in August 2012

ROFDA adopts ReposiTrak in May 2013 (Retailer Owned Food Distributors & Associates) as part of a trade-association wide initiative with 14 possible wholesalers representing 20% of the supermarket stores in the US with more than 150,000 suppliers

…tracking and tracing food & drugs in the global supply chain


Large Addressable Market

Addressable Market

$550 million addressable U.S. market > ~150 - 200 Retailers> ~100,000 total connections @ ~$5K each

Additional supply chain management services> From basic service to enterprise supply

chain management > Increase average rev. per connection

$1 billion+ food & drug safety> 167,000 domestic manufactures,

processors, warehouses; 254,000 foreign> 570,000 U.S. facilities in the food service

segment> 2 million farmers / 5 million international

Base Level Service

$550 million

Food & Drug

SafetyAdditional

Services [2x Base

Level]


Impactful Leadership TeamName ExperienceRandy Fields Chairman & CEO Co-founder Mrs. Fields Cookies, Co-founder Captiva Software

Ed Clissold CFO & General Counsel

Previously served as General Counsel for Mrs. Fields’ Cookies and was also in private practice

Robert Allen Director Former CEO of Southern Belle Dairy and EVP of Borden, Inc.

Austin Noll Director Consumer packaged goods consultant. Former executive at General Foods, Borden, and Nabisco

Rich Juliano Director Grocery retailer consultant. Former executive at SUPERVALU, Giant Eagle, and others

James Gillis Director Co-CEO of Source Interlink Companies, Inc., a marketing and fulfillment company of entertainment products

Bob Hermanns Director Director of Food Industry Programs at the University of Southern California and former CEO of Associated Grocers

Bill Kies Director Principal of Kies Consulting, specializing in the supermarket industry. Former COO of IGA, Inc.

Ronald Hodge Director Former CEO of Delhaize America and former CEO of Hannaford Bros. Co.


Select Retailer Partners


Select Supplier Customers


“Hub & Spoke” Financial Model3 terms of art: Hub = Retailer Spoke = Supplier Connection = Retailer & Supplier data exchange

which requires no installation of software AND no on-site visit

Original market of smaller hubs and their spokes Retailers paid an annual subscription and “rolled-out” platform to Supplier base Historical Hub/Spoke subscription value of $500,000 to $1,000,000 annually

Now shift in focus to larger hubs & upsell opportunities Larger hubs with a national footprint have a potential $3 - 5,000,000 in annual

subscription Opportunities to upsell additional supply chain modules increase revenue per

connection by an order of magnitude

Strong customer retention equals recurring revenue PCG solutions become foundational, making PCG invaluable with a 90%+

retention rate


Contribution Margin Going Forward

100% 75%

25%

Incremental Revenue Incremental Cost of Sale

Marketing Allowance Sales Commissions Travel Sales Promotions Miscellaneous

Incremental Contribution Margin

2121

Q3-20

09Q4-

2009

Q1-20

10Q2-

2010

Q3-20

10Q4-

2010

Q1-20

11Q2-

2011

Q3-20

11Q4-

2011

Q1-20

12Q2-

2012

Q3-20

12Q4-

2012

Q1-20

13Q2-

2013

Q3-20

13

$1,200,000.0$1,300,000.0$1,400,000.0$1,500,000.0$1,600,000.0$1,700,000.0$1,800,000.0$1,900,000.0$2,000,000.0$2,100,000.0

Financial “Snapshot”• Adjusted EBITDA: EBITDA plus bad debt expense, stock

compensation & expenses, and acquisition related costs.• Free Cash Flow: Net cash provided by (used in) operating activities

less replacement purchases of property and equipment

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012($3)

($2)

($1)

$0

$1

$2

$3

Free Cash Flow *($millions)

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012($3)

($2)

($1)

$0

$1

$2

$3

Adjusted EBITDA *($millions)

Subscription Revenue Growth Qtrly ($millions)

Net Debt

Q2-2010

Q3-2010

Q4-2010

Q1-2011

Q2-2011

Q3-2011

Q4-2011

Q1-2012

Q2-2012

Q3-2012

Q4-2012

Q1-2013

Q2-2013

Q3-2013

(10,000,000)

(8,000,000)

(6,000,000)

(4,000,000)

(2,000,000)

-

2,000,000

4,000,000


Park City Group Investment Highlights> Recurring revenue streams with multi-year

visibility – ~90%+ customer retention rate gives strong earnings visibility.

> Generating significant positive cash flow… Significant operating leverage with 75%+ incremental margin. No need to raise capital.

> Accelerating growth & strong balance Sheet– in both revenue and EPS due to recent national account wins.

> Strong competitive advantage – 16 years of development and ~$125 million of invested capital in propriety platform.

> ReposiTrak™ partnership is well positioned to become the standard for tracking and tracing food and drugs in the global supply chain.

> Influential board of directors and experienced management team – current and former grocery, retailing, consumer products, dairy, and magazine industry senior executives.

NYSE MKT: PCYG Headquarters: Salt Lake City, Utah

Recent Price (8/21/13) $6.48 52-Week Range $2.71 -$8.38 Shares Outstanding 16.1 MM Fully Diluted Shares 17.6 MM Market Capitalization $141.9 MM TTM Revenue $10.9 MM

TTM Adjusted-EBITDA $2.6 MMOwnership

~40% Insider Ownership

23

NYSE MKT: PCYGwww.parkcitygroup.com

Thank You

For more info, contact:

Dave MossbergInvestor RelationsThree Part Advisors817-310-0051


APPENDIXPark City Group


Early results show an incredible time savings for category management personnel who previously took months to get the info consolidated for analysis

Consolidation of over 50 million points of data into a usable format enabling analysis by store cluster, which validated and improved on the retailer’s previous analysis

PCG recommended quantity and assortment by UPC for prescribed store clusters

In Focus in a Fraction of the TimeDSD Visibility/Category Review for a Retailer

RESULTS:

CLIENT:

CHALLENGE:

SOLUTION:

Large, national retail chain and their reading glasses vendor

The Category Manager needed to know how much inventory to carry in each store cluster and getting this information together was previously a long, manual, tedious process (taking months)

PCG brought the necessary info together in one place (ScoreTracker) enabling analysis by PCG’s retail-tenured category management experts

Long-term expectation is to improve distribution voids, reduce inventory by $15+ million and begin following an automated approach to ensure appropriate ordering


RESULTS:

CLIENT:

Got (the right amount of) Milk!SBT / SLR for a Supplier

Borden DairyCHALLENGE: Borden lacked visibility to in-store performance Was not using actual consumer demand via point-of-sale data to

create replenishment orders Suffered from high out-of-stocks, and high returns (dumps)

Sales are up ~10% Out of stocks have been cut by 50% (an identified problem at

certain stores) Returns have been cut by almost 50%

SOLUTION: Through a scan-based trading go-to-market strategy coupled with PCG’s

store-level replenishment solution, Borden was able more closely match delivery to actual consumer demand


SOLUTION:

CLIENT:

Spend a Dollar, Make ElevenScan-based Trading & DSD Visibility

Mid-Size Mid-western Grocery Chain

CHALLENGE:

Scan-based Trading Over the previous three years, and a $300,000 investment (combined monthly subscription

and implementation costs), this chain has recorded an ROI of ELEVEN times the cost ($3.4m) with a modest SBT group of less than half a dozen vendors

DSD Visibility Future program expansion will be to utilize PCG’s DSD Visibility solution where out of stock

and overstock situations can be identified and corrected and the targeted savings is about $5,000,000 annually.

Executing an SBT program developed from scratch, this mid-western chain of about 130 stores was super cost conscious when it came to a third-party SBT service provider

NEXT STEPS: PCG will continue engagement with merchandising using our “Customer

First” approach, to locate lost sales opportunities for the SBT vendors Future expansion to remaining DSD vendors (non-SBT) to enable a

complete view of the out-of-stock and overstock situations


PCG Reduces ShrinkScan-based Trading

Park City Group Retailer Non-Park City Group Retailer

00.10.20.30.40.5

.14%

.45%

Shrink % $/Inventory

“BBU runs significantly lower shrink when the retailer is PCG partner, versus our other SBT retailers who do not have a relationship with PCG. With synchronization, all pricing and promotional errors are identified before the fact rather than after, virtually eliminating the tedious task of identifying and resolving these issues.” Don Rehe, Bimbo Bakeries, USA

Shrink averages three times

higher without PCG

2929

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

For the Three and Nine Months Ended March 31, 2013 and 2012


Non-GAAP Metrics Disclosure The Company believes that providing both GAAP and adjusted non-GAAP measures of its

performance will provide meaningful supplemental information regarding its operational effectiveness and to enhance investors’ overall understanding of the Company’s current financial performance and prospects for the future. Management believes that investors benefit from seeing its results “through the eyes” of management in addition to the GAAP presentation.

It is Managements belief that while not in accordance with or an alternative for GAAP, the adjusted information allows for greater transparency to supplemental information used by management in its financial and operational decision making.

The adjusted information excludes items, such as amortization of intangible assets, impairment charges, depreciation, charges to consolidate and integrate recently acquired businesses and non-cash stock based compensation, and other non-cash charges that may have a material effect on the Company’s net income and net income per share in accordance with GAAP.

Management monitors these items to ensure that expenses are in line with expectations and that its GAAP results are correctly stated, but does not use them to measure the ongoing bottom line operating performance of the Company. Furthermore, the non-GAAP or adjusted information provided by the Company may be different from the non-GAAP or adjusted information provided by other companies.

3131

For the Three Months Ended For the Nine Months Ended(In $000's)Audited results of operations 2013 2012 2013 2012

Net Income (loss) 209$ (353)$ 350$ (808)$

Adjusted EBITDA Reconciliation Adjustments:Depreciation and amortization 223 226 683 671Bad debt expense 81 103 81 173Interest, net 34 47 112 168Stock based compensation 252 248 777 811One-time expenses (stock and cash) - - - 60

Adjusted EBITDA 799$ 271$ 2,003$ 1,075$

March 31, March 31,

Adjusted EBIDTA Reconciliation of GAAP and Non-GAAP Financial Measures


3232

For the Three Months Ended For the Nine Months Ended(In $000's, except per share)Audited results of operations 2013 2012 2013 2012

Net Income (loss) 209$ (353)$ 350$ (808)$

Non-GAAP Net Income (loss) Reconciliation Adjustments:Stock based compensation 252 248 777 811One-time expenses (stock and cash) - - - 60Acquisition related amortization (1) 126 126 378 378

Adjusted Non-GAAP Net Income (loss) 587$ 21$ 1,505$ 441$

Preferred Dividends (289) (208) (788) (626)Adjusted Non-GAAP Net income to Common Shareholders 298$ (187)$ 717$ (185)$

Weighted average shares, diluted 12,750,000 11,838,000 12,420,000 11,733,000Adjusted Non-GAAP EPS, diluted 0.02$ (0.02)$ 0.06$ (0.02)$

March 31, March 31,

Non-GAAP Earnings Per Share Reconciliation of GAAP and Non-GAAP Financial Measures


3333

For the Three Months Ended For the Nine Months Ended(In $000's)Audited results of operations 2013 2012 2013 2012

Net cash provided by operating activities (462)$ 252$ 417$ 644$

Purchase of property and equipment (48) (91) (113) (145)Adjusted Free Cash Flow (510)$ 161$ 304$ 499$

March 31,

Non-GAAP Free Cash Flow Reconciliation Adjustments:

March 31,

Free cash flow includes net cash provided by operating activities less replacement purchases and equipment.Capital expenditures related to long-term investments and new technology developments are omitted. During2Q13 the Company invested $232,000 in leasehold improvements for its new corporate headquarters located inSalt Lake City, UT, this amount is excluded from the Free Cash Flow calculation.

Non-GAAP Free Cash Flow Reconciliation of GAAP and Non-GAAP Financial


3434

(In $000's)Audited results of operations 2013 2012

Total Debt 2,285$ 2,849$

Less: Total Cash 4,396 631

Non-GAAP Net Debt (2,111)$ 2,218$

Non-GAAP Free Cash Flow Reconciliation Adjustments:

As of March 31,

Non-GAAP Net Debt Reconciliation of GAAP and Non-GAAP Financial


3535

For More Information


Contact:

Dave MossbergInvestor RelationsThree Part Advisors817-310-0051

Pcyg investor presentation mwic

Business

salt lake

park city

utah recent

strong earnings

75 incremental

accelerating

global supply

operations