Pcyg investor presentation_may_2013

1

NYSE MKT: PCYG www.parkcitygroup.com

May 2013

Investor Presentation

2 2

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

3 3

Park City Group Investment Highlights > SaaS Recurring revenue streams with

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

> Generating Significant Positive Cash Flow… Significant operating leverage 75%+ incremental margin No need to raise Capital

> Accelerating Growth – in both revenue and EPS due to recent national account wins.

NYSE MKT: PCYG Headquarters: Salt Lake City, Utah Recent Price (5/8/13) $4.85 52-Week Range $2.71 - $5.75 Shares Outstanding 16.1 MM Fully Diluted Shares 17.6 MM Market Capitalization $78.1 MM TTM Revenue $10.9 MM

TTM Adjusted-EBITDA $2.6 MM Ownership

36.5% Mgmt & Board / 15% Institution

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

> Influential Board of Directors and Experienced Management Team – Current and former grocery, retailing, consumer products, dairy, and magazine industry Senior executives.


4 4

Impactful Leadership Team Name Experience Randy 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.


5 5

Park City Group Business Overview • Software-as-a-Service (“SaaS”) provider • Provide third-party “Wal-Mart like” data

exchange between grocery stores and their suppliers

• Strong value proposition for retailers & suppliers

• Increased sales • Decreased inventory • Enhanced customer loyalty

• Food and Drug Safety – On path to being the industry standard for FDA compliance for food and drug tracking

Hub & Spoke Model


6 6

Core Issue #1 – Grocery Industry Challenges

Risk adverse, low growth industry > 1% revenue growth with ~3% pre-tax margin

> Balance sheets are highly leveraged

> Asset intensive industry highly dependent on inventory turns

Huge challenge…Out of stocks! > When customers cannot find products they want…

> 31% will purchase at a competitor

> 9% won’t purchase the item at all

Source: Out of Stock study funded by P&G, sponsored by FMA, FMI and NACDS and conducted by Thomas W. Gruen,Ph.D., University of Colorado at Colorado Springs, USA and Dr. Daniel Corsten, IE Business School Madrid


7 7

Core Issue #2 – Supply Chain Issue No end to end “visibility” in the supply chain > Supply chains view the world from what has shipped…NOT based on what has sold

> 30% of store sales from DSD Vendors- Stores have no visibility to DSD inventories creating the overstock/out-of-stock problem

> Inaccurate data perpetuates the supply chain problem

Supply chain is incredibly

complicated


8 8

Core Issue #3 – WalMart’s Impact on the Grocery Industry

Wal-Mart’s grocery industry market share from 0% to ~25% in 15 years…

AND they recently announced a price decrease!

-Business Insider


9 9

Park City Group Solution > Supply chain visibility STARTS with point of sale data and works

back up the supply chain > Capture information at the point of sale > Provide greater visibility into consumer demand > Turn data into actionable information across the entire supply

chain > Collaboration between the Retailer and the Supplier

(“collaborative commerce”)

Customer Value Proposition > Reduce 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 Sell More – Stock Less – See Everything

10 10

PCG Success and Large Direct Store Delivery Growth Opportunity

PCG dominant in these segments PCG growth opportunities

OOS = Out-of-stock


11 11

“Hub & Spoke” Financial Model

3 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 > Larger hubs with a national footprint have a potential $3-5,000,000 annual

subscription > Opportunities to upsell additional supply chain modules increase revenue per connection by an order of magnitude


12 12

Select Retailer Partners

13 13

Select Supplier Customers

14 14

Many Additional Upsell Opportunities

Visibility - Base level service – Reporting of key metrics, e.g. sales, deliveries, returns, days of supply,

lost sales Scan-based Trading (SBT) with Visibility

– Include SBT shrink reporting to the above and get a complete picture Computer Assisted Ordering – (CAO)

– Retailer-focused distribution center ordering Store Level Replenishment – (SLR)

– Supplier-focused Vendor Managed Inventory – (VMI)

– Supplier-focused Demand Planning – (DP)

– Supplier-focused Fresh Market Manager – (FMM)

– Perishable production planning and ordering tool Data Metrics & Analysis

– Business analysis and Category Management services including Plan-o-grams


15 15

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


16 16

ReposiTrak ™- Global Food and Drug Track & Trace System 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


17 17

ReposiTrak ™- Global Food and Drug Track & Trace System

Large Addressable Market

U.S. Market alone is $1 billion annually • 167,000 domestic manufactures, processors, warehouses • 570,000 facilities in the food service segment • 2 million farmers Opportunities Internationally • 254,000 foreign food manufacturers • 5 million farmers o Initial retail, wholesaler and supplier

implementations began in August 2012 o Currently implementing one wholesaler,

several thousand suppliers as part of a trade-association wide initiative with 14 possible wholesalers controlling 20% of the supermarket stores in the US

o In negotiations with the Chinese FDA


18 18

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

Food safety initiatives:

> Includes all supplier facilities from “Fork to Farm”

Base Level Service

$550 million

Food Safety Initiative

Additional Services [2x Base

Level]


19 19

Contribution Margin Going Forward

100%

75%

25%

Incremental Revenue Incremental Cost of Sale Marketing Allowance Sales Commissions Travel Sales Promotions Miscellaneous

Incremental Contribution Margin


20 20

$1.2 $1.3 $1.4 $1.5 $1.6 $1.7 $1.8 $1.9 $2.0 $2.1

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

($3)

($2)

($1)

$0

$1

$2

$3

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Free Cash Flow * ($millions)

($3)

($2)

($1)

$0

$1

$2

$3

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Adjusted EBITDA * ($millions)

Subscription Revenue Growth Qtrly ($millions)

Net Debt (10,000,000)

(8,000,000)

(6,000,000)

(4,000,000)

(2,000,000)

-

2,000,000

4,000,000

21 21

Park City Group Investment Summary > SaaS Recurring revenue streams with

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

> Generating Significant Positive Cash Flow… Significant operating leverage 75%+ incremental margin No need to raise Capital

> Accelerating Growth – in both revenue and EPS due to recent national account wins.

NYSE MKT: PCYG Headquarters: Salt Lake City, Utah Recent Price (5/8/13) $4.85 52-Week Range $2.71 - $5.75 Shares Outstanding 16.1 MM Fully Diluted Shares 17.6 MM Market Capitalization $78.1 MM TTM Revenue $10.9 MM

TTM Adjusted-EBITDA $2.6 MM Ownership

36.5% Mgmt & Board / 15% Institution

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

> Influential Board of Directors and Experienced Management Team – Current and former grocery, retailing, consumer products, dairy, and magazine industry Senior executives.


22

NYSE MKT: PCYG www.parkcitygroup.com

Thank You