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Company Background
Financial
Sales and the Selling Process
OTCBB: PCYG, Stock and Associated Questions
Products and the Marketplace
Miscellaneous Questions
Company Background
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There are a lot of references to Mrs. Fields Cookies - Is Park City Group a part of Mrs. Fields?
The genesis of the software ideas and concepts come from the time when Randy Fields was co-founder of Mrs. Fields Cookies. There is no current relationship between Mrs. Fields Cookies and Park City Group. This is the technology that was developed and used to operate Mrs. Fields Cookies in its earliest days, and was purchased from Mrs. Fields more than 10 years ago.
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Isn't it hard to find talent in the middle of Utah?
Absolutely not! We are in the middle of a ski resort town and historically the Company
has found it NOT to be a disadvantage to be in this sort of a location. We are only
30 minutes from Salt Lake City which has a large talent pool and has a significant
number of technology companies. This area has also been designated over the last
few years as one of Money magazine's top 5 cities in the US in which to live. Being
in Park City has made it attractive for customers and prospects to come to visit
- as a matter of fact we do notice many requests for meetings that fall on a Friday
or a Monday!
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How big is the company and how is the staff divided?
The Company currently has 33 employees comprised in the following areas: 11 in research & development, 10 in customer support and services, 7 in sales/marketing and 5 in administration. The Company also has 8 additional staff developers and analysts located in Bangalore, India.
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Who composes the management team for Park City Group?
The Company's management team is composed of retail operations and software industry veterans who are responsible for the day-to-day operations.
Randy Fields, Chairman and CEO.
Mr. Fields career reflects his strong entrepreneurial skills. Initially leveraging his educational experience, in the early 1970's, he established a financial and economic consulting firm called Fields Investment Group. He then co-founded Mrs. Fields Cookies with Debbi Fields, and served as its chairman from 1978 to 1990. He purchased the software rights from Mrs. Fields Cookies and created Park City Group in 1990. Today, he continues to define the strategic direction of Park City Group, Inc. and shares his expertise and the collective experience through consulting and speaking, interviews and guest lecturing engagements both in the retail industry as well as in the general business environment. Mr. Fields received his B.A. magna cum laude, and his M.A. from Stanford University.
John Merrill, Chief Financial Officer.
Mr. Merrill has over 17 years experience in both the public and private sectors of finance and accounting. Prior to joining Park City Group, he was most recently Chief Financial Officer for Peak Solutions Group a consulting firm focused on providing tactical business solutions for growth oriented small business including valuations, compliance, systems integration and process consulting. From 1998 to 2003, Mr. Merrill was Regional Controller for Clear Channel Communications, Inc., a $19 billion publicly traded broadcasting and outdoor advertising company operating 1,200 radio stations in the United States. Prior to joining Clear Channel, Mr. Merrill was the Controller of the Academies Division of IMG, a $2 billion global leader in professional athlete management whose clients included Tiger Woods, Venus Williams, Pete Sampras and Anna Kournikova. Throughout his career, Mr. Merrill has had significant exposure to various sectors of both sporting goods retail and service industries. Mr. Merrill began his career with KPMG and holds a Bachelors and a Masters degree in Accounting from the University of South Florida.
Bob Hermanns, Senior Vice President / Director.
Mr. Hermanns joined the Company in March of 2007 as Senior Vice President. Mr. Hermanns
is responsible for U.S. customer relations and corporate development and also
is an acting member of the Park City Group Board of Directors. Mr. Hermanns has
over 40 years experience in all phases of retail and wholesale grocery operations.
Mr. Hermanns was President and Chief Executive Officer and Vice Chairman of the
Board of Directors of Associated Grocers, Inc. from 2002 through 2005. He is
also the former Chief Operating Officer of Weis Markets, a $2 billion NYSE company
operating 163 retail food markets in the Mid-Atlantic States. Prior to joining
AG and Weis Markets, Mr. Hermanns enjoyed a 30-year career with American Stores
Company, an $18 billion food and drug retailer, where he held a number of executive
management positions including Chief Operating Officer for Procurement and Logistics.
A graduate of Western Michigan University with a BS degree in Food Marketing,
Mr. Hermanns also holds an MBA from the University of Southern California.
Shaun Broadhead, Director Research and Development.
Mr. Broadhead is responsible for all the development activities for Park City Group. His team does the design and coding of the products. Shaun is the primary driver for developing new patents and is the coordinator of the activities surrounding the creation of new products concepts. Mr. Broadhead holds a B.S. in Business Information Systems from Utah State University.
Carolyn Doll, Vice President, Marketing & Education.
Ms. Doll is responsible for marketing activities including industry business marketing, investor relations activities as well as marketing materials development. Carolyn also develops and delivers product education and is the product manager for the ActionManager applications. Ms. Doll holds a B.A. in Psychological Consultation and Speech Communications and a M.A. in Organizational Communication from the Univeristy of Iowa.
Russ Ruby, Vice President.
Mr. Ruby has 25 years experience in operations, merchandising, brand and category management. He was previously VP of Sales & Marketing at Larry’s Markets, VP of Retail Development at NCH Marketing Services, VP of Sales & Merchandising for Peapod, and VP of U.S Sales for President’s Choice International. Mr. Ruby has a B.S. in Marketing from Indiana University and a M.S. in Food Marketing from St. Joseph University in Philadelphia.
Steve Lewis, Director Business Metrics Group.
Mr. Lewis has more than 12 years experience in retail grocery operations with American Stores and Safeway. He also has over 6 years of food brokerage experience representing manufacturers such as Georgia Pacific, Quaker, and ConAgra Foods. And Mr. Lewis has over 13 years in enterprise business software solutions with Radix Corporation and Siebel Systems. Mr. Lewis received his bachelors degree in Business Administration from University of Texas.
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Who are the board of directors and what are their backgrounds?
The Park City Group Board of Directors is composed of well respected and experienced executives from the retail industry:
Robert W. Allen: Mr. Allen was most recently Chief Executive Officer of Southern Belle Dairy where he established a leadership team to reposition the company and developed a position in the market place for the branding of its products. Prior to this, he was Executive Vice President of Borden, Inc. where he was recruited to turn around the largest and most trouble division of the Company. He is also the immediate past Chair of Kid Peace International, a $160 million non- profit agency assisting children in crises.
Edward Dmytryk: Mr. Dmytryk has had a successful career as a business operations director with significant business management and operational over site experience.
Randall Fields: Mr. Fields is Chairman and Chief Executive Officer of Park City Group.
James R. Gillis: Mr. Gillis is President, Chief Operating Officer and Co-CEO of Source Interlink Companies, Inc., a premier marketing, merchandising and fulfillment company of entertainment products. Prior to his tenure with Source, he was President, CEO, and Owner of Brand Manufacturing Corporation, a leading designer and manufacturer of retail display systems. Previously, he was Managing Partner of Aders, Wilcox, Gillis Group, a global developer of trade relationships serving major brand marketers and retailers worldwide.
Bob Hermanns: Mr. Hermanns is Senior Vice President of Park City Group.
Richard S. Krause: Mr. Krause is currently President and Chief Executive Officer of Elan Nutrition, Inc. (an affiliate of Sun Capital Partners, Inc.) a major manufacturer and formulator of sports-performance, weight management and healthy lifestyle nutrition bars. Prior to this, he was President of Cannon Solutions, Inc., a global operating group with businesses in the merchandising systems, automated distribution and retail technologies sectors serving major brand marketers and retailers.
Financial
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What kind of growth can we expect over the next few years?
As we often say, our customers' success is the measure of our own economic success. Our growth over the next several years is going to come from four sources: expansion of our technology within our existing customers, the addition of new customers from our direct sales efforts, increasing revenues from our newly formed professional services team and the increase in market penetration from our alliance partners.
Putting it simply, it is more important to us to focus on the success of our customers than it is to simply focus on high rates of revenue growth. If we continue to be successful with our customers, it is certainly a reasonable assumption to expect as a shareholder, improvement not only in our revenue levels but certainly in our profitability levels.
Our success to date with our customers bodes well for acceleration in our growth beginning in the current fiscal year (FY08). We are confident that our shareholders will be pleased with our progress.
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Will costs increase commensurately with growth in new customers and revenues?
One of the more interesting aspects of being in the software business is that we have spent a great deal of money in the last several years developing a very highly productive, proprietary JAVA based development environment that enables us to develop applications today and going forward, at a lower cost than what would be typical in the industry. As a result of an increase in the number of customers and growth in our revenues, we will not be adding costs at the same rate that we will be adding revenues.
Sales and the Selling Process
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What is the typical duration time for getting a sale?
In 2007, we modified a segment of our business strategy to incorporate a subscription based selling of our newest product, Supply Chain Profit Link (“SCPL”). While many of our customers turn to us for end-to-end business solutions, the SCPL product focuses on improving bottom line results through tactical management of out of stocks, shrink, promotion planning and assortment plans in both perishable and non-perishable departments. Subscription based sales of our Supply Chain Profit Link program is typically in the 3 to 6 month sales cycle range. Rapid acceptance and implementation coupled with quick analytics and actionable results are driving trial and sales of SCPL.
The typical sales cycle for licensing of Park City Group technologies, whether it is for Fresh Market Manager or ActionManager the amount of time needed is between six (6) months to two years. The reason for this is because of the depth and breadth of our functionality, a prospect customer is looking at many different products and our software is an expensive transaction for the customer company in the range of several hundred thousand of dollars or more. This type of sale requires time and focus on the part of the purchasing company coupled with the fact that it is a senior level decision (usually including the CEO, COO, CFO, CIO, etc.). It takes time for meetings to be scheduled, for the prospective customer to complete their due diligence, for references to be checked, etc.
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How do you get new customers?
Traditionally, the Company expands its customer base through a number of techniques: through referrals from existing customers and by directly selling though a high level sales process which can take anywhere from 6 months to 2 years for traditional license sales. Subscription based sales of our products are typically in the 3 to 6 month sales cycle range.
The direct sales process for license sales for Fresh Market Manager and ActionManager is lengthy by the virtue of the fact that for any new prospect, there are a substantial number of the areas in the business that require education as it relates to the benefits of Park City Group's technology. We frequently require meetings with most "C" level executives, (i.e., Chief Executive Officer (CEO) or Chief Operating Officer (COO) in order to obtain guidance, direction and ultimately a decision. Because the technology is an enterprise software solution and one that can substantially change the strategic initiatives of the customer with a focus on bottom line results and profitability, it typically requires the highest level of the most senior management of the business to make the decision.
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How does the company charge for its products?
The Company prices its proprietary software license sales computed based on the number of locations for its products and in some cases, specifically with Fresh Market Manager, has charged by the department within a location. Subscription based sales for Supply Chain Profit Link are charged on an annual basis calculated by the size of the category and number of stores represented. The Company prices its support services and maintenance typically at 18% of license sales. In addition, we offer custom consulting services which vary in hourly rate.
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Park City Group has been increasing investor awareness of the company but how will it increase market awareness for the products?
As you have seen, the Company has been working hard to increase awareness in the investment community to Park City Group and its products and while the focus was directed to the investment community, a surprising result has been that the retail marketplace has also become more aware of Park City Group. Our plan is to increase our public relations and media activity around the company and its products. As press begins to publish articles and feature our customers and products we will make sure that both markets are aware of our activities.
OTCBB:PCYG, Stock and Associated Questions
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When will PCYG be trading on an exchange instead of on the bulletin board?
At this point there are a number of qualification issues and over time these issues will become more easily surmounted. At that time, we will re-examine listing on other Exchanges.
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Why do some insiders, including the CEO sometimes sell shares?
Our CEO, Randy Fields owns approximately 50% of the outstanding shares of common stock of the Company. Historically, Mr. Fields personally has provided and secured both debt and credit facility financing using his individual assets as collateral on behalf of the company. Furthermore, Mr. Fields has a 10b-5 plan in place whereby shares of his common stock are bought and sold systematically throughout the year to achieve portfolio diversification. The amount of stock that will be sold in any given year is not a significant share of his total holdings. Mr. Fields, management, directors, and other corporate insiders rely on portfolio diversification in any company stock. This should in no way be an indication to investors as to a particular view of stock performance, operational activities or investment merits of the Company.
The CEO's diversification plan and program sales are a long term plan that could last for a number of years. Investors should be aware that the CEO will be selling stock on an ongoing basis, and if Insider Selling is an important criterion for your due diligence, then you should take this into consideration before making an investment in Park City Group. The CEO, like most other CEOs should diversify his portfolio and manner by which this is done is to periodically sell stock. Again, Mr. Fields program for diversification does not now, nor has it ever been a reflection of his belief in the Company; it is a personal financial matter.
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Why are some insiders, including the CEO buying shares?
The Company has instituted options plans, salary reductions and stock purchase plans, etc. to enable employees, directors and others to acquire stock. We believe it is critical that those who contribute the most to the business should share in the Company's ultimate success.
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Why did the company do a reverse merger rather than an IPO?
At the time we made the decision to become a public company, there were several things facing us: (1) we had an exciting new product (Fresh Market Manager) and we wanted to create an ability for everybody in the company who worked hard to participate in the upside of the business and (2) at that time, in the post dot-Com bubble world, it was virtually impossible to do an IPO so we in fact did a reverse merger.
As everyone knows, a reverse merger is not without problems and certainly we have done our best to change the nature of the company we acquired from a shell to a true operating business with a high quality board of directors, strategic plans for growth and improving shareholder value, etc.
It should be noted that although a reverse merger may not be the preferred method, companies such as The Home Depot, for example, have also started their public lives in a reverse merger.
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Why does your company pay for investor relations and
marketing promotions?
One of the difficulties of being a company on the Bulletin Board is that it is not possible for brokers to solicit orders for our stock and virtually no institutions can purchase securities listed on the OTCBB marketplace. As a result, companies on the Bulletin Board must be responsible for increasing investor awareness and it is necessary to use paid investor resources to perform this task. If investors will do their due diligence and as a result will understand the business problem we solve, appreciate our customers' success and our improving financials, they will determine that Park City Group merits an investment. The point is that it is in the best interest of the shareholders for the Company to increase its market recognition.
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How many shares of stock are outstanding and what is the float?
Information about PCYG shares as of March 31, 2008 and according to our transfer agent:
Common Shares Outstanding = 9.218 million
Float = 4.74 million shares
Products and the Marketplace
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What products does the company offer?
Our business focus is in the development, support and services associated
with our computer software. We have three distinct, but fully compatible
solution offerings.
The first is Fresh Market Manager - focused on the perishable items of the grocery, supermarket and convenience store industries. The products composing this offering are: Item Level Cost Control and Category Management, Demand Forecasting, Production Planning, SKU base Inventory, Computer Assisted Ordering and Real-Time Alert Advisor. In addition, the Company has recently announced Center Store Manager that provides the same types of management for the dry goods area of the customers.
The second is ActionManager - focused on improving business operations processes such as workflow, labor management and providing best practice advice. These applications have been marketed to retail, hospitality/entertainment, as well as to the grocery and convenience industry. The products composing this offering are: electronic forms and simplified mail systems, labor scheduling, labor requirements forecasting, time and attendance, drill down business analysis tool, an operations dashboard, computer based training, and hiring and testing tools.
Third is Supply Chain Profit Link - part of a fully integrated collaborative solution for perishable, non-perishable and convenience store operations. Supply Chain Profit Link addresses the critical item level category management that has previously eluded grocers and convenience store operators while providing timely information to the supplier for improved item management. Supply Chain Profit Link monitors product movement, while reducing shrink, waste and out-of-stocks. With its computer assisted ordering and SKU based inventory, Supply Chain Profit Link adds to the timeliness of supply chain management and improves category management capabilities. Supply Chain Profit Link delivers a unique collaborative solution that strengthens the Supplier/Retailer relationship.
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How do you create this software? It says you have a lot of Patents but i don't really know what that means, can you explain?
We have an exceptional development organization. As a matter of fact we frequently tell prospective investors and customers that the crown jewel inside of Park City Group is not the applications but rather the people in the development organization. These individuals have enabled us to create amazing technologies that are easy to use, easy to deploy, easy to support and that solve real business problems.
We typically start with some sort of business problem with which we have some familiarity from our own operational and retail experience, and we work backwards from the problem to develop a solution. We have formal processes in place as a proper development organization should, in order to make sure that our development efforts are focused on revenue producing opportunities whenever possible.
The notion of patent protection is one that is based on the fact that once we have invested a substantial amount of money in the development of intellectual property that we think is proprietary and distinct; we want to secure a patent that will enable us to protect ourselves legally should someone encroach on that privileged intellectual property space.
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Who is your competition and how do you position yourself against them?
Although we have many competitors - our products are distinct in the marketplace because they are end-to-end complete solutions for an entire business problem or process. We have competitors in the marketplace that simply address some aspect of an overall business problem. Since this technology came from the Mrs. Fields Cookies business, we recognize that a business needs to be approached as a whole, not in a piece-parts fashion and as a result, the technology is a modular, plug and play, fully integrated enterprise-wide solution for any problem we attempt to solve. Our competitors conversely are not able to offer that choice.
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Why are you focusing on the grocery industry? Would your products work in other industries?
Because we are a small company and focus is essential, we have tried to concentrate on an industry that has the highest possible return for us. A characteristic of an industry that would produce high returns would be an industry that is under increasing pressure and dramatic demand for a product or service that the Company can offer. That is certainly the case in the supermarket industry. Over the last 15 years the supermarket industry has grown from doing a relatively small percentage of its total business in perishable products to now more than 50% of all business in the supermarket industry is in the perishable arena. As a matter of fact, for every dollar of supermarket revenue $.52 is from perishables and the next highest category is beverages with only $.10. As a matter of fact, the supermarket industry has become a perishable industry both literally and figuratively.
Wal-Mart and other Value Retailers at the same time are creating a tremendous economic threat to the industry. We are seeing the rest of the supermarket business (the non-perishable portion) under extreme price pressure. We believe the supermarket industry is at one of those very important reflection points when, as the senior executives of the industry focus more on competitive advantage and perishables, they will find that they need control systems in perishables to drive profitability. Park City Group offers, we believe, the best fully integrated end-to-end solution for perishables management in the business. We also intend to extend our reach in the supermarket industry around over and through perishables to other inventory and labor management issues.
Our technology is rules based and very flexible and certainly could operate in other industries not just other retail industries like food service, hospitality, restaurants, etc. but we also believe the technology has applicability as far a field as healthcare and others. We also have a tremendous opportunity to take this technology outside the US and sell this to retailers who are also looking for solutions of this sort. In summary, there is an enormous market opportunity for us and it is up to management and the Board to provide prudent supervision of our expansion into those markets.
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Are you actively marketing your products in Europe and Asia?
We already have a few customers in both Europe and Asia and we are actively working to acquire additional introductions into those markets.
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How hard is it to install and operate your products?
One of the more interesting characteristics of the Fresh Market Manager, ActionManager, and Supply Chain Profit Link applications is that in relation to the number of people in the customer organization and the scope of the technology, the products are relatively easy to install. The word "easy" is often misused in the industry but we have several examples where we have been able to install our technology successfully in a matter of a few months, when often, projects of this sort can stretch to a year or two.
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Can you tell us about the patents?
The Company owns nine patents and three patents pending associated with the applications. Having developed a number of these products in the early period of computer software for business operations, the patents reflect the innovation in technology of the Development organization of Park City Group. The Company is vigilant in protecting its intellectual property and vigorously defends to patents. Park City Group believes the patented technology is a substantial element of the Company's total assets.
- Business Method Projection System & Method
5,459,656
- System & Method for Estimating Business Demand Based on Business Influences
5,712,985
- System & Method for Making Staff Schedules as a function of available resources as well as Employee skill level, availability & priority Scheduler
5,111,391
- Product Demand System & Method Planner
5,299,115
- Data Management Using Nested Records & Code Points
5,634,123
- Agent-Based Multithreading Application Programming Interface ActionBase
5,421,013
- System & Method for Creating, Processing & Storing Forms Electronically
5,410,646
- Automated Post Office Based Rule Analysis of E-Mail Messages & Other data Objects For Controlled Distribution in Network Environment Gatekeeper
6,073,142
- System & Method for Application Development of User Defined Business Event Driven Task Manager Using Action Boards
- Method of Operating Data Base Utility
*Pending
- Quick Switch Language Support Pending
7,113,904
- Disambiguating Point-of-Sale Data Through Item Indexing
7,292,991
Miscellaneous Questions
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If I know of a company that might benefit from Park
City Group software, how can I let you know?
Please send an email directly to our CEO, Randall Fields, randy@parkcitygroup.com.
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You have identified the strengths of the company, but aren't there some opportunities for improvement?
When we look at the Company as a whole, we would be remiss in saying that every aspect of the business can always be improved. It is certainly true that because of the financial constraints of the business we have to selectively determine where we spend our money. We have chosen to invest heavily in our product development, especially our Fresh Market Manager product, and as a result, other things received less resource than we either wanted or that they deserved. For example, the Company has taken the position that our Development team should get money first, and other priorities, specifically customer support and consulting services would be second. We scaled back on marketing activities and intentionally kept the sales team smaller than we would like but supplemented the sales activities with the use of industry specific strategic alliances. As we grow and are able to improve both the balance sheet and our financial position, the Company will be able to increase resource allocation to those activities that will further accelerate growth of the business -such as increased staffing for our growing consulting services business, increasing marketing programs such as public relations and trade shows, etc.
Statements in this document 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 for the year ended June 30, 2006 filed with the Securities and Exchange Commission. This release 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 release 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.
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