2014 east coast ideas conference

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NASDAQ: PCYGwww.parkcitygroup.com

Investor PresentationJune 2014

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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 themeaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Actof 1934. Future events, risks and uncertainties, individually or in the aggregate, could causeactual results to differ materially from those expressed or implied in these statements. Thosefactors could include changes in economic conditions that may change demand for theCompany's products and services and other factors discussed in the "forward‐lookinginformation" section and the "risk factor" section of the management's discussion and analysisincluded in the Company's report on Form 10‐K and 10‐Q or current reports on Form 8‐K filedwith the Securities and Exchange Commission. This presentation is comprised of interrelatedinformation that must be interpreted in the context of all of the information provided and careshould be exercised not to consider portions of this presentation out of context. Park CityGroup uses paid services of investor relations organizations to promote the Company to theinvestment community. Investments in any company should be considered speculative andprior to acquisition, should be thoroughly researched. Park City Group does not intend toupdate these forward‐looking statements prior to announcement of quarterly or annualresults.

Sell More – Stock Less – See Everything

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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 supply chain company that detects, exposes and solves sales, inventory and product problems at each point in the global food and drug supply chain

ConsumerRetailerDistributor / Retailer DC

DSD Supplier

Warehouse Supplier

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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 – 17+ 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.


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The Central Issue in the Grocery Industry Today…


• 50% will purchase at a competitorup 20% from six years ago

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

• 12% will switch brandsdown 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…

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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

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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

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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


PCG dominant in these categories

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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

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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…

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

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

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This is a Game Changer

ReposiTrak Reduces Risk

Retailers now own product liability for everything they sell

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ReposiTrak™……Provides opportunity to accelerate growth of PCG’s existing hub and spoke network…

• Receives, stores, shares, and maintains regulatory documentation all from one convenient location

• Tracks & Traces products and components to products throughout the food, drug and dietary supplement supply chains

• 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


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Endorsed and Partnered With

“ReposiTrak augments our food and drug safety efforts…with a proven, comprehensive and easy‐to‐implement solution that doesn’t require systems changes and is extremely cost effective.” – Dr. Hilary Thesmar, FMI VP for Food Safety Programs

“We see the ReposiTrak system becoming an industry standard for the retail supply chain, helping all trading partners meet the new federal food safety requirements, reducing unsalable products and keeping the end consumer healthy.” ‐‐Francis Cameron, President & CEO of ROFDA

*ROFDA includes 14 wholesalers representing 20% of the supermarket stores in the US with more than 150,000 suppliers

The largest supermarket trade organization


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ROFDA Market Opportunity: ReposiTrak


Level 1 ‐ $100/month x 3 retailer customers$117,000,000 annually

Level 2 ‐ $50/month x 1 finished goods customers$45,000,000 annually

Level 3 ‐ $25/month x 1 ingredients /pkg. customers$22,500,000 annually

Finished Goods 25,000 Entities each with approximately 1.3 facilities

Ingredients/Packaging75,000 Entities with 1 facility

each

Grower75,000 Entities each with 1

facility

A possible example:

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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 Safety

Additional Services[2x Base Level]


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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

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.


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Select Retail Partners


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Select Supplier Customers


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“Hub & Spoke” Financial Model3 terms of art:

Hub = RetailerSpoke = SupplierConnection = Retailer & Supplier data exchange which requires no installation of software AND no on‐site visit

Original market of smaller hubs and their spokesRetailers paid an annual subscription and “rolled‐out” platform to Supplier baseHistorical Hub/Spoke subscription value of $500,000 to $1,000,000 annually

Now shift in focus to larger hubs & upsell opportunitiesLarger hubs with a national footprint have a potential $3 ‐ 5,000,000 in annual subscriptionOpportunities to upsell additional supply chain modules increase revenue per connection by an order of magnitude

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


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Contribution Margin Going Forward

100%100% 75%75%

25%25%

Incremental Revenue Incremental Cost of Sale

Marketing AllowanceSales CommissionsTravelSales PromotionsMiscellaneous

Incremental Contribution Margin


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Financial “Snapshot”

* Adjusted EBITDA: EBITDA plus bad debt expense, stock compensation & expenses, and acquisition related costs

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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 – 17+ 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.


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Nasdaq: PCYGwww.parkcitygroup.com

Thank You

For more info, contact:

Dave MossbergInvestor RelationsThree Part Advisors817‐310‐0051

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APPENDIXPark City Group


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Sales Doubled, Ordering Labor Costs EliminatedUsing DSD Visibility & Strategic Analysis and Store Level Ordering,

A Major Social Expressions Company was certain they were losing sales. Their card pockets were often empty yet their in‐store ordering/merchandising labor expenses were soaring. Highly seasonal, they needed a better way to know what product assortment was best for each store, and a better way to create orders in a timely manner. With PCG’s Visibility & Analytics solution, they gained that knowledge creating store‐specific orders using PCG’s Store Level Ordering solution. Their out‐of‐stocks were eliminated, their sales doubled and they’re on their way to saving hundreds of thousands of dollars annually per chain in labor.


DOUBLED sales by eliminating out‐of‐stocksEliminated out‐of‐stocks through visibility & analysis of store sales, swiftly tailoring the store order which maximized salesSaved hundreds of thousands of dollars annually per chain by eliminated ordering labor

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Returns and Days of Supply Reduced nearly 40%Using Store Level Replenishment, DSD Visibility & Strategic Analysis

Creating a better order to meet demand…A large, regional dairy supplier was experiencing high returns and the incredible expense of several ‘hot shots’ per month per store when the retailer ran too low on product. They needed to create a better order based on consumer demand. Using PCG’s store level replenishment system, they smoothed their supply chain and eliminated the out‐of‐stocks and overstocks.


Using Park City Group’s Store Level Replenishment…Saved average $1,500 per month, per store by eliminating “hot shots”Fewer overstocks lead to a 40% reduction in product returnsDays of supply was reduced by 40% making product fresher

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Returns Reduced by 8.4 Percentage PointsUsing advanced analytics and inventory controls

Category Optimization ProgramLarge national bread supplier participated in a Regional Midwest retailers category optimization program using Park City Group’s advanced analytics and visibility program. They were able to identify problem stores and items that were driving excessive returns.


The supplier using Park City Group’s Visibility and Analytics …─ Identified return driving items, stores, and routes─ Reduced returns by ‐8.4 percentage points YOY (from 24.5% to 16.1% )

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Increased sales by 42%Using advanced analytics and schematic development

Category Optimization ProgramLarge national bread supplier participated in a Regional Midwest retailers category optimization program using Park City Group’s advanced analytics and visibility program as well as space recommendations. Schematic analysis provided key information that resulted in increased space in key stores and markets


The supplier using Park City Group’s Visibility and Analytics …─ Identified key opportunities to increase space in stores that needed it

─ Increased sales 42% vs. YOY

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Increased sales by 20%Using advanced analytics and increased distribution

Category Optimization ProgramLarge national bread supplier participated in a Regional Midwest retailers category optimization program using Park City Group’s advanced analytics and visibility programs. With the ability to identify high volume competitive like items in stores they currently did not serve, they made a compelling case to gain distribution into those stores.


The supplier using Park City Group’s Visibility and Analytics …─ Identified high volume like item in competitors in stores where they had no distribution

─ Gained distribution in five incremental stores─ Increased sales 20% vs. YOY

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PCG developed a systematic process that supports efficient analysis of over 1,600 items in over 4,000 locations that have 8‐12 attributesBoth retailer and supplier can now view the same comprehensive analysis that was previously impossibleWIP – moving to scan‐based trading using store‐level replenishment


Massive Overstocks & Out‐of‐Stocks DiscoveredThru Visibility and Big‐Data Analysis

A national retail chain with over 4,000 stores couldn’t determine where they were overstocked or out‐of‐stock on their popular reading and sunglasses

PCG Identified $25 million inventory reduction opportunity from improved management of inventory and ensuring best‐sellers were in‐stock in all planograms providing foundation for store‐level orderingSales increase estimate of $5‐8M annualized from improved distribution voids and reduced out‐of‐stocks

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Sales Up 8% With Visibility, Store‐Level Replenishment, & Big Data Analysis

A large, national dairy lacked visibility to in‐store performance and was not using actual consumer demand via point‐of‐sale data to create replenishment orders. They also suffered from high out‐of‐stocks, and high returns (dumps).


Sales dollar trend Year over Year improved by 8%Sales units trend Year over Year improved by 9.3% Out of stocks have been cut by 50% Returns have been cut by almost 50%

Park City Group analyzed big data and using the results coupled with store‐level replenishment, they were able to match delivery to actual consumer demand improving overall performance

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Utilizing PCG Store Level replenishment coupled with warehouse VMI, the supplier has been successful in improving in stock positionsReturns have been greatly reducedProgram is being expanded to add items from the initial supplier as well as other suppliers also serviced by this broker

The supplier wanted to use direct consumer demand to generate warehouse level replenishment orders for a select group of itemsWarehouse level orders needed to “pass through” the Club Depots leaving no on hand inventory at this locationWarehouse inventory levels to be balanced and returns reduced


Exclusive supplier of quality products to a club warehouse retailer using a brokerage model

Cross Docked SLR Reduces Out‐of‐Stocks Cross Docking Store Level Replenishment: Supplier

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National Craft Brewer

Gained control of ordering process and reduced returns by 40%Reduced out‐of‐stocks at the distributor level by 22%Increased sales through the distributor network by 11% in the first 12 monthsImproved delivery of seasonal products to reduce returns and increase sales

Distributors ordering in random fashion resulting in high returnsMany highly seasonal products with short lifecycleDeveloped “Freshest Beer Program” in improve quality to consumerNeed for increased control of inventory levels at 400+ national distributors


Leading brewer of seasonal and year around craft beers that does not own distribution network

Sales up 11%; Returns Down 40%; Out‐of‐Stocks Down 22% Vendor Managed Inventory: Through Distributors

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Reduced inventory quantities by 1/3Reduced inventory costs by $170 million across Grocery, Dairy, Frozen, GM and HBC departments (over 6 full operating years)Reduced safety stock by 55% in the Grocery department

The current ordering system didn’t support ordering from multiple distribution centersAll products were being ordered without regard to how fast they were selling, or how much stocking space existed, creating inconsistent stock conditions and resulting in lost sales and overstocked slow moving items

Efficiently Scaled to Meet Demand and Saved MillionsDC Procurement using Demand Forecasting and ABC Analyzer

“Best–in–Class” Retailer

“Best‐in‐Class” implemented PCG’s computer‐aided ordering system including the ABC Analyzer feature coupled with PCG’s consulting

“Collaborative data sharing can achieve these types of results. We’re looking forward to expanding this program beyond the warehouse…to Direct Store Delivered suppliers.” – Supply Chain Executive, “Best‐in‐Class”


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Out‐of‐Stocks Reduced by 15%; Smoothed DemandDemand Planning


Reduced out of stock conditions by 15%; reduced inventory levels by 15%Able to maintain better in‐stock conditions on high‐demand itemsBetter able to manage the different demand conditions of their widely different customer base; maintained expected customer service levels

Each customer had different replenishment requirements (safety stock, forecast, etc.) and tons of information. Data from disparate sources made planning difficult.

S. Lichtenberg & Co. (Sheer Curtains)“As a leading manufacturer of private label curtains & draperies we needed to be able to cope with our customers’ random demand and manage situations where demand doesn’t behave consistently. PCG’s demand planning solution enabled us to reduce stock outs and inventory at the same time. The solution has a lot of bang for the buck and their customer service is outstanding.” – Scott Lichtenberg, President / Owner

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Sales Increase 3x, Returns Decrease 50%Using Scan‐based Trading & Store‐level Replenishment in Dairy Case

Direct head‐to‐head ComparisonA national mass market retailer doing SBT recently studied two suppliers to the dairy case. One used only scan‐based trading (SBT). The other used the entire suite of Park City Group SBT solutions, including store‐item level analysis and ordering. A pre/post test analysis showed incredible results.


The supplier using Park City Group’s entire suite …─ Increased sales three times more (8%/Supplier A to 2.5%/Supplier B) ─ Reduced waste (product returns) 50% more

…than the SBT‐only supplier

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Sales Trend Up 7%, Returns Trend Down 20%Using DSD Visibility & SBT in Commercial Bakery Category


INCREASED SALES dollar trend by 6.9% even though total grocery sales were trending down REDUCED RETURNS by 20%Program expanded

Mid‐Size, Mid‐western Regional Retailer wanted to increase sales and reduce out‐of‐stocks in their commercial bakery department

Analysis showed out‐of‐stocks, returns in excess of industry norms, and sales opportunities by store, by SKU. Space–to‐sales planograms were developed, vendors were score‐carded and performance improved. The PCG process became integrated into their category strategy. Success is providing basis for expansion into another category.

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“Day of Week” Sales Trends up 45% in SnacksUsing Scan‐based Trading / Store‐Item Analysis in Snacks

A large, regional retailer had huge holes on the shelf where the favorite snack chip products had sold out, but only on certain days.


Sales Trends increased by 45%

Using a SKU analysis approach with scan‐based data, changing the strategy to deliver and stock based on heavy consumer demand days solved the problem and increased customer satisfaction

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Shrink is nearly 70% Less using Park City GroupScan‐based Trading

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0.2

0.4

0.6

Park City GroupRetailer

Non‐Park City GroupRetailer

.14%

.45%

Shrink % $/Inventory


Shrink averages three times

higher without PCG

“We run significantly lower shrink when the retailer is a PCG partner, versus ourother SBT retailers who do not have a relationship with PCG. Withsynchronization, all pricing and promotional errors are identified before the factrather than after, virtually eliminating the tedious task of identifying andresolving these issues.” – SBT Operations Director, National Commercial Bakery

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Shrink Reduced by 44% in DairyUsing Scan‐based Trading, PCG Analysis & DSD Visibility

Shrink managed down by 44% and maintained in dairy industry average range of 1‐2%, by following PCG’s process guidance and using PCG’s SBT and analysis toolsProduct returns are down by 30% by using PCG’s Visibility tools

PCG analysts reviewed the stores with high shrink and identified several process issues. Returns were not being captured and reported; and some items were not scanning accurately. Both created lost revenue for the Dairy and high shrink for both retailer and supplier.


This dairy supplier to a large, regional retailer was recording high waste

2014 east coast ideas conference

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Transcript of 2014 east coast ideas conference