Ladies and gentlemen, thank you for standing by. Good day and welcome to the Park City Group Second Quarter 2017 Earnings Call. Today’s call is being recorded. At this time, I would like to turn the conference over to Dave Mossberg, Investor Relations. Please go ahead, sir.

Thank you, Paula. Thanks everyone for your interest in Park City Group. Before we begin, we will be referring to today’s earnings release, which can be downloaded from the Investor Relations section of the Company’s website at parkcitygroup.com. I also want to remind everyone that this conference call could contain forward-looking statements about Park City Group within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Park City Group’s management and are subject to risks and uncertainties which could cause actual results to differ from the forward-looking statements. Such risks are more fully discussed in the Company’s filings with the Securities and Exchange Commission. The information set forth herein should be considered in light of such risks. Park City Group does not assume any obligation to update the information contained in this call. Our speakers today will be Mr. Randy Fields, Park City Group’s Chairman and CEO, and Todd Mitchell, Park City Group’s CFO. Todd?

Thank you, Dave. Good afternoon everybody. It was another great quarter for us. Not only were we able to exceed our internal targets for both revenue and profitability, both came in at record highs for the company. We believe this clearly demonstrates, continued strength in the business and the operating leverage inherent in our business model. Revenue, fiscal 2Q revenues grew 35% to $4.8 million from $3.5 million a year ago. This was the highest quarterly revenue ever and revenue growth for the quarter was basically in line with 1Q level, despite a much tougher year-over-year comparison. Strong top line growth continues to be driven by progressively stronger momentum across our business. ReposiTrak is continuing to generate strong growth due to both new customer wins and improvements in operating process. And we are seeing strong demand for our vendor portal and supply chain application, as we reap the benefit of past investments and our new converged sales efforts. Given the momentum we saw in fiscal 2Q and continue to see, we are confident that we will likely exceed the financial and operating targets we articulated at the end of fiscal 2016. Profitability, fiscal 2Q net income was $1.38 million. This was 29% of total revenue in the quarter and I would note, more than twice as much as net income for all of fiscal 2016. It's also worth pointing out when compared to net income of 281,000 in fiscal 2Q '16, we converted $1.2 million in incremental revenue into a $1 million plus swing in net income. Some of this clearly reflects our ability to leverage investments and infrastructure which we were just completing a year ago and some of it is an indication of the relatively high contribution margin of our new application based business model. Looking out over…

Hi, everybody. There is lots to say, although I think the numbers speak for themselves and as a result of lot to say, I have prepared written remarks. I know the most interesting things I tend to say are off-the-cuff. So I'll be careful, but I think there is going to be a lot of information in the next few minutes. Fiscal second quarter results obviously were building on the momentum that we generated in the first quarter. Second quarter revenue was up 35% and revenue for the first half up 36% compared to a year ago. At the risk of sounding like a broken record, once again we generated record results for both revenue and bottom line profitability. Interestingly, the second quarter did achieve one more of the five goals that we set out for the year. We did have quarterly net income exceeding $1 million. In fact As Todd mentioned, it was a record $1.4 million and it certainly demonstrates our operating leverage. Feel good about our balance sheet, it’s stronger. We obviously ended the quarter with north of $12 million cash. Couple of things to note in terms of what generated the growth, we saw growth in several of our new applications, including ReposiTrak and the vendor portal, I know everybody is looking to the number I am about to give, so pay attention here, we said that we wanted to end 2017 with 20,000 connections and yes, we did it in the second quarter. So, we've exceeded our fiscal 2017 goal just half way through the year and for perspective on that, I think it's interesting to note that a couple of years ago it took us a year to do the same number of connections that we now do on average per month. And to…

Thank you, sir. [Operator Instructions] And first we'll go to Joe Feller, Private Investor.

Hey, Randy.

Yes, sir.

Awesome quarter.

Thank you.

To drill down a little bit into your comments on the new administration, the only thing that concerns me is piece of legislation that’s been introduced into lower House of Congress are called REINS.

Yes, very familiar with it.

Okay. And number one, it’s a two part question, number one, would impact the regulations around FSMA and for some of the other investors to explain the difference. The FSMA is a law that has got to go through the executive branch to develop rules to bring companies into compliance with the law, which as REINS progresses, the existing rules or the potential or the rules that have already been issued by the FDA. So the first part of the question is, will REINS impact those rules. The second part of the question is, will REINS impact at all ReposiTrak's relationship with the FDA, and may be you could explain what that relationship is currently?

Got it. Okay. Actually, there’s a teeny tiny part of the regulatory stuff that REINS potentially impacts as regard to FSMA was one of the last rules promulgated and it’s totally meaningless in the context of what we do. So the rest of FSMA is settled regulatory done, REINS really just goes back for all intents and purposes a few months. But anything that would be at OMB or other financial ramifications of regulatory environment would be problematic, but there isn't anything that would impact it in REINS, no impact whatsoever. And remember, I personally - let me answer the second part, and I am going to hitchhike off that if it’s okay, Joe. We don't have a direct relationship with the FDA. I think it's fair to say we've had sessions with them. And if you can imagine as if was done by it. A meeting was set up around what we do. We thought it would be with the FDA and I believe there were 17 government agencies and the phone call, 17 different government agencies, don't hold me to the number, it could have been as many 24, but I remember 17 different agents; touch food, it’s stunning. So the FDA is aware of it, we don't really want to get too close to government, it’s the best way to put it, we're best off right where we are. And so, we don't see any impact. I can tell you from an industry insiders’ perspective, the industry really – it wouldn’t care whether it was self-regulated or regulated by the FDA, remember we're only talking about part of it. The other part of the industry is USDA, so the USDA touches all of the proteins that people eat, FDA doesn’t deal with meat et cetera, but to the most part, it really is a specialized group. So there's whole bunch of agencies that touch this issue of food, food safety, et cetera. We see nothing on the horizon, nothing, that would cause people to stop record keeping. The best way to think about ReposiTrak is not how does the law impact you, but what would cause people not to keep record. Our livelihood depends on people wanting to keep records about their business. So in the event of a lawsuit or regulatory examination or just an inquiry, they have those records easily on file, and can reference them quickly. So we just don't see any impact from regulatory change at this point. And if we could wave a magic wand, we would and we try and simplify it from 3000 pages to about 200 pages and that would speed adoption. It would frankly make our life with people much easier, would be good for our business. Thank you for the question Joe.

All right. Thank you.

[Operator Instructions] Next we'll go to Will Hamilton with Manatuck Hill.

Hey, good afternoon, guys.

Hi, there.

Randy, I appreciate the actual color in terms of guidance and outlook, I was wondering if any chance you could provide us an update on how many hubs you are in–I think you mentioned, more customers and obviously we saw the fresh market news?

Yes. I'm going to give you a number; I am going to wish that I didn't because it just is not a terrific indicator.

Is it, okay.

But here it is, the number is 33, but what's going to happen over the next year is you have to think in terms of large and small hubs. If it's a retailer or wholesaler, they typically drive around from a few hundred to a few thousand suppliers. On the other hand, we're seeing a much higher level and in future years this is definitely the area of opportunity for us. Suppliers themselves becoming hubs for their suppliers, so a supplier goes wait a minute, I love this thing. If I had my suppliers on it, I give visibility to the retailer deeper into the supply chain. So increasingly that hub number will not be a super indicator. So I think, as we look at the back half of this year there is going to be a number of new, large hubs for sure. We certainly think there will be a number of smaller ones; it’s just not a very good indicator. So that's probably more then anything else the reason we didn’t pointed out, but I knew you ask it Will.

Thank you. Are we at a point though where suppliers already connected to another retailer and then if a new retailer signs on and you've already had the connection, so it's like two X right from the get go.

Yes, that’s actually a really good question. I don't know the exact percentages, but I'm guessing now that 40%, maybe 50% of the suppliers connected to a hub literally just make a check mark and offer up new documentation that would correspond to that new hubs specific requirement, in other words, that more and more of our business is indeed already on the system. So they are getting up to speed is simpler and faster. I think is that question you were asking?

Yes.

Yes, I think it’s around 40. It probably never goes higher than 60 or 70 because there are so many local suppliers, right, there is this horrible movement in America toward localization of supply chain, which means that that if you are in–I’m picking, I’m making this up, you are in some place in Massachusetts you are going to have 200 local farmers as suppliers if there are retailers there, that wouldn't be suppliers to anybody else in the system in California for example. So there will always be a significant share of local, unique suppliers as opposed to national footprint and even regional footprint kinds of suppliers. But it’s about 40%. So it goes–that’s why say we are now in this virtuous circle where it's going faster, we simplified the business. We gone to this idea of central billing with our retailers, everything now is massively speeded up from where it was a couple years ago. But most importantly, the compliance rates are going north and they are going north faster than they used to so I think to your point since more and more of our suppliers are experienced with us they know what to do and they go faster, right.

Right. Okay.

Thank you.

Yes. Just one question on the market place, is the larger retailer you are working with right now in the food side or is that retailer that may have then involved the supply chain side of things, and can you expand a little bit on the economics for that business, is this going to be a subscription or is it like a commission where you go out to say low single digit growth, mid single digit commission?

Yes. I think during its first year of operation, there is little if any revenue opportunity. We just want to get it scaled up quickly. The first buyer in the system is fair to say, does food, but they also do other stuff. So you wouldn't think of them as a grocery company per se, is the best way of thinking about it, okay, but they sell groceries. I am not trying to be too cutesy, I just can't name them.

Okay, all right. Thank you, guys.

You bet.

[Operator Instructions] Moving on, we'll go to Steve Bell, Private Investor.

Great quarter, Randy.

Thank you, sir.

One question, what do we have left available to us in NOL carry-forwards?

I think it’s like a $100 million, I don’t know, it’s a big number Steve.

Okay. In other words, we're covered for couple years at least?

Yes, we do not want to pay our fair share again, I guess, this is a right way of putting it. I am sorry if that was a political comment.

God bless America.

Yes, exactly. I think as we look out, and again, I want to give managements view, so this isn’t a Wall Street view. Our pipeline is growing significantly, meaning prospect calling us, prospect interested, people who are deep into the sales cycle if you will become hubs. That gives us pretty good visibility to what we need to do not can do, but what we need to do to be sure that we are ready for this substantial expansion of the business in terms of economic relationship. So the most important thing that’s happened this year is not just that we scaled it up, so we've done 10,000 or whatever number of connections 8 or 10,000 in the last six months. That's interesting, but what's important is the quality of those, the speed at which they've come up, the customer perception of us et cetera is extraordinary. So my focus is you know, Steve is I am more interested in the quality of our result because I am still old-fashioned, old is the operative word, enough to believe that if we do a great job for our customers they will start talking about us. I can tell you–let me give you two anecdotes in this conference we just attend. First of all in two of the three meetings, we had customers of ours doing presentations about how good we were, talking about how we had massively changed their compliance, et cetera. In one case, it got to be almost a free-for-all because as one customer is talking about us, we had two other customers saying yes, I use them too and boy, they did this for me in insurance and so on and so forth So there is a high degree of excitement in our customer base about what we…

So we'll use the NOL?

We'll use the NOL.

Okay. Great quarter again, thanks for all of your efforts. I greatly appreciate it.

Thank you. Thank you, guys for the support.

There are no further questions. I'll turn it back to our presenters for any additional or closing comments.

Thank you all for your interest and our numbers are in the press release. So please feel free to give us a call or email us if you have any questions.

Didn’t we say, that the second half of the year is going to be better.

That’s right.

Thank you, guys. Thanks for taking the time.

That does conclude today's conference. We'd like to thank everyone for their participation. You may now disconnect.