PARK CITY GROUP INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ]
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Preliminary Proxy Statement
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[ ]
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Confidential, for Use of the SEC Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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[ ]
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Definitive Additional Materials
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[ ]
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Soliciting Material Pursuant to 14a-12
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PARK CITY GROUP, INC.
(Name of Registrant as Specified In Its Charter)
_________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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PARK CITY GROUP, INC.
299 South Main Street, Suite 2370
Salt Lake City, Utah 84111
(435) 645-2000
September 18, 2015
Dear Stockholders of Park City Group, Inc.:
You are cordially invited to attend the 2015 Annual Meeting of Stockholders of Park City Group, Inc. (the “
Annual Meeting
”), which will be held at our corporate offices located at 299 South Main Street, Suite 2370, Salt Lake City, Utah on October 28, 2015 at 2:00 p.m., local time.
Details of the business to be conducted at the Annual Meeting are described in the Notice of Internet Availability of Proxy Materials (the “
Notice
”) you received in the mail, and in this Proxy Statement. We have also made available a copy of our 2015 Annual Report on Form 10-K for the year ended June 30, 2015 (“
Annual Report
”) with this Proxy Statement. We encourage you to read our Annual Report. It includes our audited financial statements and provides information about our business and services.
As part of our efforts to conserve environmental resources and prevent unnecessary corporate expenses, we have elected to provide access to our proxy materials over the Internet, rather than mailing paper copies. Our management believes that providing our proxy materials over the Internet increases the ability of our stockholders to access the information they need, while lowering the costs of our Annual Meeting and conserving natural resources.
Regardless of whether you plan to attend the Annual Meeting in person,
please read the accompanying Proxy Statement and then vote by Internet, telephone or e-mail as promptly as possible.
Please refer to the Notice for instructions on submitting your vote. Voting promptly will save us additional expense in soliciting proxies and will ensure that your shares are represented at the Annual Meeting.
Our Board of Directors has unanimously approved the proposals set forth in the Proxy Statement and we recommend that you vote in favor of each such proposal.
We look forward to seeing you at the Annual Meeting.
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Sincerely,
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RANDALL K. FIELDS
Chief Executive Officer
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YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to vote by internet, telephone or e-mail as promptly as possible. Submitting your vote assures that a quorum will be present at the Annual Meeting and avoid the additional expense of duplicate proxy solicitations. Any stockholder attending the Annual Meeting may vote in person, even if he or she has returned a proxy.
-1-
PARK CITY GROUP, INC.
299 South Main Street, Suite 2370
Salt Lake City, Utah 84111
(435) 645-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 28, 2015
Dear Stockholders of Park City Group, Inc.:
We are pleased to invite you to attend the Annual Meeting of Stockholders of Park City Group, Inc., a Nevada corporation (the “
Company
”), which will be held at the Company’s corporate offices located at 299 South Main Street, Suite 2370, Salt Lake City, Utah, on October 28, 2015 at 2:00 p.m., local time, for the following purposes:
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1.
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the election of six directors to our Board of Directors, each to serve until the next annual meeting of stockholders, or until his respective successor is elected and qualified;
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2.
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ratification of the appointment of HJ & Associates, LLC as our independent auditors for the fiscal year ending June 30, 2016; and
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to vote upon such other matters as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.
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These matters are more fully discussed in the attached Proxy Statement.
We have elected to provide access to this year’s proxy materials primarily over the Internet under the Securities and Exchange Commission’s (the “
SEC
”) “notice and access” rules. We believe that this process expedites stockholders’ receipt of proxy materials, while lowering the costs of our Annual Meeting and conserving natural resources. On or about September 18, 2015, we mailed a Notice of Internet Availability of Proxy Materials (the “
Notice
”) to each of our stockholders entitled to notice of and to vote at the Annual Meeting. This Notice contained instructions on how to access the attached Proxy Statement, our 2015 Annual Report on Form 10-K (“
Annual Report
”), and how to vote via the Internet, telephone and e-mail. The Notice also included instructions on how you can receive a paper copy of your proxy materials. The Proxy Statement and the Annual Report both are available online at:
http://www.proxyconnect.com/parkcitygroup
The close of business on August 31, 2015 (the “
Record Date
”) has been fixed as the Record Date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof. Only holders of record of shares of our common stock and Series B Preferred Stock at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. A complete list of these stockholders will be available for examination by any of our stockholders for purposes pertaining to the Annual Meeting at our corporate offices, 299 South Main Street, Suite 2370, Salt Lake City, Utah, during normal business hours for a period of 10 days prior to the Annual Meeting, and at the time and place of the Annual Meeting.
-2-
Whether or not you expect to attend in person, we urge you to vote your shares as promptly as possible by Internet, telephone or e-mail, so that your shares may be represented and voted at the Annual Meeting.
If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.
Our Board of Directors unanimously recommends that you vote “FOR” Proposal Nos. 1 and 2, each of which are described in detail in the accompanying Proxy Statement.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON OCTOBER 28, 2015: THE ANNUAL REPORT AND PROXY STATEMENT ARE AVAILABLE ONLINE AT: http://www.proxyconnect.com/parkcitygroup
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By Order of the Board of Directors,
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Randall K. Fields
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Chief Executive Officer, Chairman and Director
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Salt Lake City, Utah
September 18, 2015
-3-
PARK CITY GROUP, INC.
299 South Main Street, Suite 2370
Salt Lake City, Utah 84111
(435) 645-2000
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of Park City Group, Inc., a Nevada corporation (the “
Company
”), for use at the 2015 Annual Meeting of Stockholders (“
Annual Meeting
”) to be held on October 28, 2015 at 2:00 p.m., local time, and at any adjournment or postponement thereof, at our corporate offices located at 299 South Main Street, Suite 2370, Salt Lake City, Utah.
We have elected to provide access to this year’s proxy materials primarily over the Internet under the Securities and Exchange Commission’s “notice and access” rules. On or about September 18, 2015, we mailed a Notice of Internet Availability of Proxy Materials (the “
Notice
”) to each of our stockholders entitled to notice of and to vote at the Annual Meeting. This Notice contained instructions on how to access this Proxy Statement, our 2015 Annual Report on Form 10-K (“
Annual Report
”) and how to vote via the Internet, telephone and e-mail. The Notice also included instructions on how you can receive a paper copy of your proxy materials. The Proxy Statement and the Annual Report both are available online at:
http://www.proxyconnect.com/parkcitygroup
Voting
The specific proposals to be considered and acted upon at our Annual Meeting were summarized in the Notice, and are described in more detail in this Proxy Statement. On August 31, 2015, the Record Date for determination of stockholders entitled to notice of and to vote at the Annual Meeting, we had outstanding 19,041,681 shares of our common stock, par value $0.01 per share (“
Common Stock
”), and 625,375 shares of our Series B Preferred Stock (“
Series B Preferred
”), each of which are entitled to vote at the Annual Meeting. Each holder of Common Stock is entitled to one vote per share of Common Stock held, and each holder of Series B Preferred is entitled to 2.5 votes per share of Series B Preferred held on the Record Date. As of the Record Date, outstanding shares represented 20,605,118 votes, consisting of 19,041,681 attributable to Common Stock and 1,563,437 attributable to Series B Preferred.
Quorum
In order for any business to be conducted at the Annual Meeting, the holders of more than 50% of the shares entitled to vote must be represented at the Annual Meeting, either in person or by properly executed proxy. If a quorum is not present at the scheduled time of the Annual Meeting, the stockholders who are present may adjourn the Annual Meeting until a quorum is present. The time and place of the adjourned Annual Meeting will be announced at the time the adjournment is taken, and no other notice will be given. An adjournment will have no effect on the business that may be conducted at the Annual Meeting.
Required Vote for Approval
Proposal No. 1: Election of Directors.
For the six nominees who receive the greatest number of votes cast at the Annual Meeting by the shares present, either in person or by proxy and entitled to vote, will be elected.
-4-
Proposal No. 2: Ratification of Appointment of Auditors.
To ratify the appointment of HJ & Associates, LLP as our independent auditors for the fiscal year ending June 30, 2016, the number of votes cast “FOR” must exceed the number of votes cast “AGAINST” this Proposal.
Abstentions and Broker Non Votes
All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. An abstention is the voluntary act of not voting by a stockholder who is present at a meeting and entitled to vote. A broker “non-vote” occurs when a broker nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary power for that particular item and has not received instructions from the beneficial owner. If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. If you do not give your broker or nominee specific instructions regarding such matters, your proxy will be deemed a “broker non-vote.”
Under Nevada law, abstentions and broker non-votes are not counted as votes cast on an item and therefore will not affect the outcome of any Proposal presented in this Proxy Statement, although they are counted for purposes of determining whether there is a quorum present at the Annual Meeting.
Voting and Revocation of Proxies
If your proxy is properly returned to the Company, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions specified thereon. If return your proxy without specifying how the shares represented thereby are to be voted, the proxy will be voted (i) FOR the election of six directors nominated by our Board, (ii) FOR ratification of the appointment of HJ & Associates, LLP as our independent auditors for fiscal year 2016, and (iii) at the discretion of the proxy holders on any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof.
You may revoke or change your proxy at any time before the Annual Meeting by filing, with our Corporate Secretary at our principal executive offices at 299 South Main Street, Suite 2370, Salt Lake City, Utah, 84111, a notice of revocation or another signed proxy with a later date. You may also revoke your proxy by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting alone will not revoke your proxy. If you are a stockholder whose shares are not registered in your own name, you will need additional documentation from your broker or record holder to vote personally at the Annual Meeting.
Solicitation
We will bear the entire cost of solicitation, including the printing and mailing of the Notice, and the preparation and assembly of the proxy and any additional solicitation materials furnished to the stockholders. Copies of any solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by telephone, facsimile or other means by our directors, officers or employees. No additional compensation will be paid to these individuals for any such services. Except as described above, we do not presently intend to solicit proxies other than by e-mail, mail and telephone.
-5-
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
The Company’s Board of Directors currently consists of six directors, each of whom is nominated to be elected at the Annual Meeting. Each of the nominees has confirmed that he will be able and willing to serve as a director if elected. If any of the nominees become unable or unwilling to serve, your proxy will be voted for the election of a substitute nominee recommended by the current Board of Directors. Upon recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has nominated for election as directors at our Annual Meeting Randall K. Fields, Robert W. Allen, William S. Kies, Jr., Richard Juliano, Austin F. Noll, Jr. and Ronald C. Hodge.
Please see the following disclosure captioned “
Directors
” for more information, including background information, business experience, and the Nominating and Corporate Governance Committee’s recommendation of each nominee.
Our Articles of Incorporation and Bylaws provide that the Board of Directors shall consist of no less than one director, and, that upon any change in the number of directors, any newly created directorships or eliminated directorships shall be apportioned by the remaining members of the Board of Directors or by stockholders.
Required Vote and Recommendation
The election of directors requires the affirmative vote of a plurality of the shares present or represented by proxy and entitled to vote at the Annual Meeting. The six nominees receiving the highest number of affirmative votes will be elected. Accordingly, under Nevada law, the Company’s Articles of Incorporation and Bylaws, abstentions and broker non-votes will not have any effect on the election of a particular director. Unless otherwise instructed or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the election of each of the nominees.
The Board of Directors recommends that the stockholders vote “
FOR
” the election of Messrs. Fields, Allen, Kies, Juliano, Noll and Hodge.
The following sections set forth certain information regarding the nominees for election as directors of the Company. There are no family relationships between any of the directors and the Company’s executive officers.
DIRECTORS
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Name of Nominee
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Age
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Title
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Randall K. Fields
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68
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President, Chief Executive Officer and Chairman
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Robert W. Allen
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72
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Director
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William S. Kies Jr.
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63
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Director
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Richard Juliano
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68
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Director
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Austin F. Noll, Jr.
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72
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Director
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Ronald C. Hodge
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67
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Director
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-6-
Randall K. Fields
has been the Chief Executive Officer and Chairman of the Board of Directors since June 2001. Mr. Fields founded the Company in 1990 and has been its President, Chief Executive Officer and Chairman of the Board since its inception. Mr. Fields has also been responsible for the strategic direction of the Company since its inception. Mr. Fields co-founded Mrs. Fields Cookies with his then wife, Debbi Fields. He served as Chairman of the Board of Mrs. Fields Cookies from 1978 to 1990. In the early 1970's Mr. Fields established a financial and economic consulting firm called Fields Investment Group. Mr. Fields received a Bachelor of Arts degree in 1968 and a Masters of Arts degree in 1970 from Stanford University, where he was Phi Beta Kappa, Danforth Fellow and National Science Foundation Fellow.
The Nominating and Corporate Governance Committee believes that Mr. Fields’ expertise in the Company’s industry and markets following his founding of the Company in 1990, his extensive sales, marketing and technical background and experience, and his knowledge of business allow him to bring a unique understanding of the industries and markets in which the Company operates, as well as an entrepreneurial vision to the Company and the Board of Directors.
Robert W. Allen
joined the Board of Directors in October 2007. Mr. Allen is a seasoned executive with many years experience as Chairman, President and Chief Executive Officer of businesses ranging in size from $200 million to $2.5 billion. Mr. Allen has over thirty years experience in the dairy industry, most notably as a catalyst for developing companies and a turn-around agent for troubled companies or divisions. 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 troubled 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.
The Nominating and Corporate Governance Committee believes that Mr. Allen’s years of experience in an area of growth for the Company, the dairy industry, as well as his extensive experience developing and managing companies in senior executive roles, add significant value to the Company and its Board of Directors in assessing challenges in one of its growth markets, and in addressing organizational and development issues facing the Company.
William S. Kies, Jr
.
joined the Board of Directors in November 2011. Mr. Kies is currently a principal of Kies Consulting, LLC, a premier consulting practice specializing in the supermarket industry since 1994. Clients include Fortune 100 consumer package goods corporations and companies offering national services, programs and in-store support to all channels of food distribution. Prior to Kies Consulting, Mr. Kies was the President and Chief Operating Officer of IGA, Inc., the world’s largest banner group of independent supermarkets with over 4,000 stores serviced by 24 wholesalers in 20 countries.
The Nominating and Corporate Governance Committee believes that Mr. Kies’ extensive management experience, including experience in the supermarket industry, together with his substantial contacts with potential clients for the Company’s services, will contribute to the Board’s deliberations and provide the Company with valuable insight and direction as the Company executes its business plan.
Richard Juliano
joined the Board of Directors in October 2012. Mr. Juliano is a partner and founder of the Burke, Gillis, Juliano Group, a consulting firm specializing in assisting retailers and manufacturers with creating strategic marketing and merchandising partnerships to grow their business and market share. He began his career with Giant Eagle Super Markets, becoming the Senior Vice President and General Manager of the GM/HBC Division and then Senior Vice President of Merchandising and Marketing of the Phar-Mor Division. Mr. Juliano then served as Executive Vice President at Thrifty Payless Drug and Vice President of Marketing and Merchandising at Genuardis Family Markets in Philadelphia. Most recently, he was a senior executive at SUPERVALU, joining the company as Executive Vice President of Supply Chain Services for the Central Region and then moving to the Corporate Retail group as Vice President, GM/HBC, and ultimately Group Vice President of Center Store Merchandising. Mr. Juliano has served on the Red Cross of Columbiana County Board of Directors, National Association of Chain Drug Stores Advisory Board, Global Market Development Center Board of Directors and Youngstown State University Athletic Board. He currently is on the President’s Innovative Network Board at GMDC.
-7-
The Nominating and Corporate Governance Committee believes that Mr. Juliano’s knowledge and experience with supply chain management for large grocery retailers allows him to substantively contribute to the Company’s business plan both with existing grocery clients, and new clients as the Company expands its business beyond the grocery industry.
Austin F. Noll, Jr.
joined the Board of Directors in October 2012. Mr. Noll is the owner of Austin Noll & Associates, a trade relations and industry affairs consultancy based in New Jersey. Mr. Noll started his career with General Foods, spending 22 years in sales related positions. He then became Vice President of Trade Relations for the grocery division of Borden, Inc., and was promoted to Vice President of Industry and Trade Relations, before moving to Nabisco, Inc. as Senior Vice President of Industry and Trade Relations. Mr. Noll has served on the Trade Advisory Boards of Grocery Manufacturing Association, Food Marketing Institute, National Grocers Association, North American Wholesale Grocers Association, Western Association of Food Chains and IGA, and is a founding member of the Trade Advisory Board of Instant Combo Savings.
The Nominating and Corporate Governance Committee believes that Mr. Noll’s experience working for and advising national food retailers provides a unique perspective to the Company that is particularly beneficial as the Company continues to expand its client base within the grocery industry.
Ronald C. Hodge
joined the Board of Directors in February 2013. Mr. Hodge is an advisor to Delhaize America, LLC, a role he transitioned into following his time as Delhaize America’s Chief Executive Officer from March 2011 to October 2012. Prior to Delhaize America, Mr. Hodge served as Executive Vice President and Chief Executive Officer of Hannaford Bros. Co. He joined Hannaford in 1980 and has served in various executive roles, including Vice President and General Manager of Hannaford’s New York Division, Senior Vice President of Retail Operations, Executive Vice President of Sales and Marketing, and Executive Vice President and Chief Operating Officer. He became President of Hannaford in December 2000 and Chief Executive Officer in 2001. While leading the start-up of Hannaford’s entry into upstate New York, Mr. Hodge was elected Chairman of the New York State Food Merchant’s Association, and served on several Community Agency Boards of Directors. He chaired the Northeastern New York United Way Campaign in 1995 and was selected as the New York Capital Region’s Citizen of the Year in 1996. Mr. Hodge holds a Bachelor of Science degree in business administration from Plymouth State College, Plymouth, New Hampshire.
The Nominating and Corporate Governance Committee believes that Mr. Hodge’s 33 years of management experience in the grocery industry, including leading the successful expansion of Hannaford Bros. Co., provides the Company with valuable industry knowledge and insight as the Company continues to grow its scan-based technologies to an expanding client base.
There have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions material to the evaluation of the ability and integrity of any director or nominee during the past ten years.
Director Compensation
The outside directors of the Company, consisting of Messrs. Allen, Kies, Juliano, Noll, and Hodge, received the following compensation during fiscal 2015:
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annual cash compensation of $10,000 payable at the rate of $2,500 per quarter. The Company has the right to pay this amount in the form of shares of Common Stock, and did so for all compensation owed directors during fiscal 2015; and
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upon appointment, outside independent directors receive a grant of $150,000 payable in shares of the Company’s restricted Common Stock calculated based on the market value of the shares of Common Stock on the date of grant. The shares vest ratably over a five-year period.
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The following table sets forth information concerning director compensation earned by our outside directors during fiscal year 2015:
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Name
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Stock
Awards ($)
(2)
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Total ($)
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Robert W. Allen
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10,000
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10,000
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James R. Gillis
(1)
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8,333
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8,333
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William S. Kies, Jr.
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25,000
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25,000
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Richard Juliano
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40,000
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40,000
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Austin F. Noll, Jr.
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40,000
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40,000
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Ronald C. Hodge
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40,000
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40,000
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(1)
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The Company received Mr. Gillis’ letter of resignation on March 6, 2015. As such, Mr. Gillis is not standing for re-election.
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(2)
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Stock awards consist solely of stock grants of fully vested Common Stock. Amounts shown do not reflect compensation actually received by the director. Instead, the amounts shown reflect the compensation costs recognized by the Company during the fiscal year for Common Stock awards as determined pursuant to FAS 123R.
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GOVERNANCE AND BOARD MATTERS
Term of Office
The Company’s Articles of Incorporation provides a Board of Directors comprised of one class of directors. Directors serve from the time they are duly elected and qualified until the next annual meeting of stockholders or their earlier death, resignation or removal from office.
Director Independence
The Board has determined that all of its members, other than Mr. Fields, who serves as the Company’s Chief Executive Officer, are “independent” within the meaning of Rule 5605(a)(2) of the NASDAQ Stock Market Rules, and the Security and Exchange Commissions’ (the “
SEC
”) rules regarding independence.
Code of Ethics and Business Conduct
In August 2008, the Company and its Board of Directors unanimously adopted a new Code of Ethics and Business Conduct, which replaced the Code of Ethics adopted in 2005. The Company’s Code of Ethics and Business Conduct is posted at the Company’s website located at www.parkcitygroup.com.
The Role of the Board in Risk Oversight
The Board’s role in the Company’s risk oversight process includes reviewing and discussing with members of management areas of material risk to the Company, including strategic, operational, financial and legal risks. The Board as a whole primarily deals with matters related to strategic and operational risk. The Audit Committee deals with matters of financial and legal risk. The Compensation Committee addresses risks related to compensation and other related matters. The Nominating and Governance Committee manages risks associated with Board independence and corporate governance. Committees report to the full Board regarding their respective considerations and actions.
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The Board’s Leadership Structure
Our Board of Directors has discretion to determine whether to separate or combine the roles of Chief Executive Officer and Chairman of the Board. Our founder, Randall K. Fields, has served in both roles since 2001, and our Board continues to believe that his combined role is most advantageous to the Company and our stockholders. Our technology has its genesis in the operations of Mrs. Fields Cookies, co-founded by Mr. Fields, and Mr. Fields possesses in-depth knowledge of the issues, opportunities and risks facing us, our business and our industry and is best positioned to fulfill the Chairman’s responsibility to develop meeting agendas that focus the Board’s time and attention on the most critical matters and to facilitate constructive dialogue among Board members on strategic issues.
In addition to Mr. Fields’ leadership, the Board maintains effective independent oversight through a number of governance practices, including, open and direct communication with management, input on meeting agendas, and regular executive sessions.
MEETINGS AND COMMITTEES OF DIRECTORS
The Board of Directors met four times and acted four times by unanimous written consent during the fiscal year ended June 30, 2015. The Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of the Company’s directors who served during fiscal 2015 attended or participated in no less than 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees of the Board of Directors on which such director served during fiscal 2015.
The following table represents the composition of each committee of the Board of Directors during the year ended June 30, 2015:
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Name of Director
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Audit Committee
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Compensation Committee
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Nominating and Corporate Governance Committee
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Randall K. Fields
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-
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Robert W. Allen
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Chairman
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Member
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-
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James R. Gillis
(1)
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Member
(2)
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Chairman
(3)
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Member
(4)
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William S. Kies, Jr.
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-
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-
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Chairman
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Richard Juliano
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Member
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Member
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-
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Austin F. Noll, Jr.
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-
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-
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Member
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Ronald C. Hodge
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-
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Member
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-
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No. of Meetings Held in 2015
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1
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1
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1
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(1)
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Mr. Gillis was chairman of the Compensation Committee and served on both the Nominating and Corporate Governance Committee and Audit Committee until his resignation.
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(2)
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Mr. Ronald Hodge filled the vacancy left on the Audit Committee following Mr. Gillis’ resignation.
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(3)
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Mr. Robert Allen now serves and the Chairman of the Compensation Committee, and has served in such capacity since Mr. Gillis’ resignation.
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(4)
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Mr. Ronald Hodge filled the vacancy left on the Nominating and Corporate Governance Committee following Mr. Gillis’ resignation.
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-10-
Audit Committee
. The Audit Committee provides assistance to the Board of Directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal accounting controls. The Audit Committee also oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to satisfy it that the accountants are independent of management. The Audit Committee currently consists of Ronald C. Hodge (Chairman), Richard Juliano and Robert W. Allen, each of whom is a non-management member of our Board of Directors. Both Mr. Allen and Mr. Hodge are also considered audit committee financial experts. We believe that the composition of our Audit Committee meets the criteria for independence under, and the functioning of our Audit Committee complies with the applicable requirements of the NASDAQ Stock Market Rules, the Sarbanes-Oxley Act of 2002 and SEC rules and regulations
Compensation Committee.
The Compensation Committee determines our general compensation policies and the compensation provided to our directors and officers. The Compensation Committee also reviews and determines bonuses for our officers and other employees. In addition, the Compensation Committee reviews and determines equity-based compensation for our directors, officers, employees and consultants and administers our stock option plans and employee stock purchase plan. The Compensation Committee currently consists of Robert W. Allen (Chairman), and Richard Juliano, each of whom is a non-management member of our Board of Directors. We believe that the composition of our Compensation Committee meets the criteria for independence under, and the functioning of our Compensation Committee complies with the applicable requirements of the NASDAQ Stock Market Rules and SEC rules and regulations.
Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee is responsible for making recommendations to the Board of Directors regarding candidates for directorships and the size and composition of the Board. In addition, the Nominating and Corporate Governance Committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations to the Board concerning corporate governance matters. The current members of the Nominating and Corporate Governance committee are William S. Kies, Jr. (Chairman), Ronald C. Hodge and Austin F. Noll, Jr. We believe that the composition of our Nominating and Corporate Governance Committee meets the criteria for independence under, and the functioning of our Nominating and Corporate Governance Committee complies with the applicable requirements of the NASDAQ Stock Market Rules, the Sarbanes-Oxley Act of 2002 and SEC rules and regulations.
PROPOSAL NO. 2
RATIFICATION OF THE APPOINTMENT OF
HJ & ASSOCIATES, LLC TO SERVE AS OUR
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL YEAR
Upon recommendation of the Audit Committee of the Board of Directors, the Board of Directors appointed HJ & Associates, LLC as our independent registered public accounting firm for the current fiscal year and hereby recommends that the stockholders ratify such appointment.
The Board of Directors may terminate the appointment of HJ & Associates, LLC as the Company’s independent registered public accounting firm without the approval of the Company’s stockholders whenever the Board of Directors deems such termination necessary or appropriate.
Representatives of HJ & Associates, LLC will be present at the Annual Meeting or available by telephone and will have an opportunity to make a statement if they so desire and to respond to appropriate questions from stockholders.
Previously, the Audit Committee of the Board of Directors of the Company appointed HJ & Associates, LLC as the independent registered public accounting firm to audit the financial statements of the Company and its subsidiaries for the fiscal years ended June 30, 2015, 2014, 2013, 2012, 2011, 2010, 2009 and 2008.
-11-
The following table presents approximate aggregate fees and other expenses for professional services rendered by HJ & Associates, LLC for the audit of the Company’s annual financial statements for the years ended June 30, 2015 and 2014 and fees and other expenses for other services rendered during those periods.
|
2015
|
2014
|
|||||||
|
Audit Fees
|
$
|
112,400
|
$
|
75,000
|
||||
|
Audit-Related Fees
|
-
|
-
|
||||||
|
Tax Fees
|
$
|
18,300
|
15,700
|
|||||
|
All Other Fees
|
-
|
-
|
||||||
|
Total
|
$
|
130,700
|
$
|
90,700
|
Audit Fees
Audit fees in 2015 and 2014 relate to services rendered in connection with the audit of the Company’s consolidated financial statements.
Tax Fees
Tax fees in 2015 and 2014 include fees for services with respect to tax compliance, tax advice and tax planning.
Audit Committee Pre-Approval Policies
The Audit Committee has established its pre-approval policies and procedures, pursuant to which the Audit Committee approved the foregoing audit and permissible non-audit services provided by HJ & Associates, LLC in fiscal 2015 and 2014. Such procedures govern the ways in which the Audit Committee pre-approves audit and various categories of non-audit services that the auditor provides to the Company. Services which have not received pre-approval must receive specific approval of the Audit Committee. The Audit Committee is to be informed of each such engagement in a timely manner, and such procedures do not include delegation of the Audit Committee’s responsibilities to management.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There have been no changes in or disagreements with accountants on accounting and financial disclosure.
Required Vote and Recommendation
Ratification of the selection of HJ & Associates, LLP as the Company’s independent auditors for the fiscal year ending June 30, 2016 requires the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting. Under Nevada law and the Company’s Articles of Incorporation and Bylaws, each broker non-vote will reduce the absolute number, but not the percentage, of affirmative votes necessary for approval of the ratification. Unless otherwise instructed on the proxy or unless authority to vote is withheld, shares represented by executed proxies will be voted “FOR” the ratification of HJ & Associates, LLP as the Company’s independent auditors for the fiscal year ending June 30, 2016.
The Board of Directors recommends that stockholders vote “
FOR
” the ratification of the selection of HJ & Associates, LLC as Park City Group’s independent auditors for the fiscal year ending June 30, 2016.
-12-
EXECUTIVE OFFICERS
The following table sets forth information regarding the executive officers of the Company during the year ended June 30, 2015:
|
Name
|
Age
|
Title
|
||
|
Randall K. Fields
|
68
|
Chief Executive Officer, Chairman of the Board and Director
|
||
|
Edward L. Clissold
|
59
|
Chief Financial Officer, Secretary, General Counsel
|
The executive officers named above were appointed by the Board of Directors to serve in such capacities until their respective successors have been duly appointed and qualified or until their earlier death, resignation or removal from office.
Randall K. Fields
has been the Chief Executive Officer, and Chairman of the Board of Directors since June 2001. Mr. Fields founded the Company in 1990 and has been its President, Chief Executive Officer, and Chairman of the Board since its inception. Mr. Fields has been responsible for the strategic direction of the Company since its inception. Mr. Fields co-founded Mrs. Fields Cookies with his then wife, Debbi Fields. He served as Chairman of the Board of Mrs. Fields Cookies from 1978 to 1990. In the early 1970's Mr. Fields established a financial and economic consulting firm called Fields Investment Group. Mr. Fields received a Bachelor of Arts degree in 1968 and a Masters of Arts degree in 1970 from Stanford University, where he was Phi Beta Kappa, Danforth Fellow and National Science Foundation Fellow.
Edward L. Clissold
joined the Company in March 2002 as General Counsel, and in August 2012 was appointed as the Company’s Chief Financial Officer. Mr. Clissold currently serves as both General Counsel and Chief Financial Officer of the Company. Prior to his time with the Company, Mr. Clissold served as General Counsel for Mrs. Fields Cookies from August 1987 to April 1995 and was also in private practice. Mr. Clissold holds a Bachelors degree in Finance from the University of Utah and a Law Degree from Brigham Young University.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information about the compensation paid or accrued during the year ended June 30, 2015 to our Chief Executive Officer and our Chief Financial Officer, our only executive officer, other than our Chief Executive Officer, who was serving as an executive officer as of June 30, 2015 and whose annual compensation exceeded $100,000 during such year (collectively the "
Named Executive Officers
"):
| Name and Principal Position | Year |
Salary
($)
|
Bonus
($)
|
Stock Awards
($)
(1)
|
All Other Compensation ($)
|
Total
($)
|
|||||||||||
|
Randall K. Fields
|
2015
|
572,252
|
(2)
|
471,875
|
(3) |
519,000
|
(4) | 124,704 | (5) | 1,687,831 | |||||||
|
Chief Executive Officer and Chairman of the Board
|
2014
|
550,000
|
(2)
|
448,125
|
(3)
|
519,000
|
(4) |
116,715
|
(5) |
1,633,840
|
|||||||
|
2013
|
375,000
|
(2)
|
73,125
|
(3) |
66,000
|
(4) |
79,492
|
(5) |
593,617
|
||||||||
|
Edward L. Clissold
|
2015
|
150,000
|
-
|
54,197
|
204,197 | ||||||||||||
|
Chief Financial Officer, General Counsel
|
2014
|
150,000
|
-
|
38,497
|
-
|
188,497
|
|||||||||||
|
2013
|
144,417
|
-
|
3,885
|
-
|
148,302
|
-13-
|
(1)
|
Stock awards consist solely of shares of restricted Common Stock. Amounts shown do not reflect compensation actually received by the Named Executive Officer. Instead, the amounts shown are the compensation costs recognized by the Company during the fiscal year for stock awards as determined pursuant to FAS 123R.
|
|
(2)
|
On June 30, 2013, the Company and Mr. Fields and Fields Management, Inc., a management company wholly-owned by Mr. Fields (“
FMI
”), entered into an updated Employment Agreement and an updated Service Agreement, respectively, replacing similar agreements that expired on the same date. The year-over-year change in Mr. Fields’ salary, bonus and other compensation are a result of terms in the updated agreements. See “
Employment Agreements
” below for a more detailed description of Mr. Fields’ updated Employment Agreement and FMI’s updated Service Agreement.
$520,205, $500,000 and $325,000 of Mr. Fields’ cash compensation during 2015, 2014 and 2013, respectively, was paid to FMI pursuant to the terms and conditions of the Service Agreement in effect during the applicable period.
|
|
(3)
|
The terms and conditions of the updated Employment Agreement by and between Mr. Fields and the Company, dated June 30, 2013, and the updated Services Agreement, by and between FMI and the Company, dated June 30, 2013, provide for an incentive bonus to be paid to Mr. Fields at the discretion of the Compensation Committee and upon approval by the Board of Directors, based upon the Company’s achievement of certain performance goals. Upon recommendation of the Compensation Committee, the Board of Directors approved a $400,000 and $375,000 bonus to Mr. Fields for the years ended June 30, 2015 and 2014, respectively. This amount reflects successful completion of certain business objectives, including successful implementation of ReposiTrak during the year ended June 30, 2015 and an increase in revenue during the 2015 period, as compared to the 2014 period.
Amounts reported for the years ended June 30, 2015, 2014 and 2013 also include $71,875 for the 2015 period and $73,125 for each of the 2014 and 2013 periods, attributable to annual vesting of a previously granted bonus.
|
| (4) | Pursuant to Services Agreement by and between the Company and FMI in effect during the applicable periods, FMI received 600,000 shares of restricted Common Stock in July 2009 and 600,000 shares of restricted Common Stock in July 2013. The shares vest ratably over a 10-year period and are valued as of the date of issuance, or $1.10 per share and $7.55 per share, respectively. The amounts reported herein represent the value of the shares of Common Stock that vested during the applicable periods. |
| (5) | These amounts include premiums paid on life insurance policies of $73,416, $57,392 and $25,344 for 2015, 2014 and 2013, respectively; computer related expenses of $6,000 for each of 2015, 2014 and 2013; Company car related expenses of $18,192, $17,917 and $16,958 for 2015, 2014 and 2013, respectively; medical premiums of $15,096, $23,406 and $19,190 for 2015, 2014 and 2013, respectively; and reimbursement for certain accounting services of $12,000 for each of 2015, 2014 and 2013. |
Employment Arrangements
The Company has an Employment Agreement with its Chief Executive Officer, Randall K. Fields (the “
Fields Employment Agreement
”), pursuant to which Mr. Fields is employed by the Company in the position of Sales Department Manager through June 30, 2018 for annual compensation of $50,000, subject to annual increases equal to 75% of the Company’s percentage annual revenue growth beginning in the 2014 fiscal year. Mr. Fields may also be eligible for an annual incentive bonus, awarded at the discretion of the Compensation Committee.
The Company also has a Services Agreement with Fields Management, Inc. (“
FMI
”), to provide certain executive management services to the Company, including designating Mr. Fields to perform the functions of President and Chief Executive Officer for the Company through June 30, 2018 (the “
Services Agreement
”). Pursuant to the Services Agreement, FMI is paid an annual base fee of $500,000, subject to annual increases equal to 75% of the Company’s percentage annual revenue growth beginning in the 2014 fiscal year. FMI may also be eligible for an annual incentive bonus, awarded at the discretion of the Company’s Board of Directors.
-14-
FMI also receives: (i) up to $1,200 per month for reimbursement of vehicle expenses; (ii) an annual computer equipment allowance of up to $6,000; (iii) 600,000 shares of the Company’s Common Stock, subject to a pro-rata 10-year vesting schedule; and (iv) a retirement annuity or other bonus award to be developed within six months of the effective date. The Company also maintains and pays the premiums for a $5.0 million life insurance policy in the name of Mr. Fields, with the beneficiary to be designated by Mr. Fields at his sole discretion.
Outstanding Equity Awards at Fiscal Year-End
The following table generally sets forth the number of outstanding equity awards that have not been earned or vested or that have not been exercised for each of the Named Executive Officers as of June 30, 2015. No other equity awards otherwise reportable in this table have been granted to any of our Named Executive Officers.
|
Option Awards
|
Stock Awards
|
|||||||||||
|
Name
|
Number of Securities Underlying Unexercised Options Exercisable
(#)
|
Number of Securities Underlying Unexercised Options Unexercisable
(#)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
||||||
|
Randall K. Fields
|
-
|
-
|
$
|
-
|
-
|
896,744
|
$
|
11,110,658
|
||||
|
Chief Executive Officer, Chairman and Director
|
||||||||||||
|
Edward L. Clissold
|
-
|
-
|
$
|
-
|
-
|
31,950
|
$
|
395,861
|
||||
|
Chief Financial Officer, Secretary, General Counsel
|
||||||||||||
|
(1)
|
Market value based on the closing price of the Company's Common Stock on June 30, 2015, as reported on the NASDAQ Capital Market.
|
Executive Compensation Discussion and Analysis
Overview of Compensation Program
The Compensation Committee of our Board of Directors has responsibility for establishing, implementing and monitoring adherence to our compensation philosophy. The Board of Directors has delegated to the Compensation Committee the responsibility for determining our compensation policies and procedures for senior management, including the named executive officers, periodically reviewing these policies and procedures, and making recommendations concerning executive compensation to be considered by the full board of directors, when such approval is required under any of our plans or policies or by applicable laws. The Compensation Committee also has the principal responsibility for the administration of our stock plans, including the approval of stock option grants to the named executive officers.
The compensation received by our named executive officers in fiscal year 2015 is set forth in the Summary Compensation Table, above. For 2015, the named executive officers included: (i) Randall K. Fields, Chairman of the Board of Directors and Chief Executive Officer; and (ii) Edward L. Clissold, Chief Financial Officer.
Highlights of the Company’s Fiscal 2015 Performance
| ● |
Achieved the highest revenue in the Company’s history.
|
| ● |
Completed the acquisition of ReposiTrak, Inc.
|
| ● |
Achieved several high volume customer wins.
|
Executive Compensation Highlights for Fiscal 2015
| ● |
4.0% Chief Executive Officer base salary increase, based on Company’s 5.4% annual revenue growth during the year ended June 30, 2014.
|
| ● |
Maintained or modestly increased base salaries of our Chief Financial Officer and other key employees.
|
Compensation Philosophy
In general, our executive compensation policies are designed to recruit, retain and motivate qualified executives by providing them with a competitive total compensation package based in large part on the executive's contribution to our financial and operational success, the executive's personal performance and increases in stockholder value as measured by the price of our common stock. We believe that the total compensation paid to our executives should be fair, reasonable and competitive.
-15-
We seek to have a balanced approach to executive compensation with each primary element of compensation (base salary, variable compensation and equity incentives) designed to play a specific role. Overall, we design our compensation programs to allow for the recruitment, retention and motivation of the key executives and high-level talent required in order for us to:
|
●
|
achieve or exceed our annual financial plan and be profitable;
|
|
●
|
make continuous progression towards achieving our long-term strategic objectives to be a high-growth company with growing profitability; and
|
|
●
|
increase our share price to provide greater value to our stockholders.
|
Role of Executive Officers in Compensation Decisions
The Compensation Committee considers action on executive compensation annually. They discuss their proposed actions with the Chief Executive Officer and make recommendations for any changes to the Company's Board of Directors. Only the Compensation Committee and the Board of Directors are authorized to approve the compensation for any named executive officer. Since our Chief Executive Officer is also a member of our Board of Directors, he does not participate in any conversation or approvals related to his compensation. Compensation of new executives is based on hiring negotiations between the individuals and our Chief Executive Officer and/or Compensation Committee.
Elements of Compensation
Consistent with our compensation philosophy and objectives, we offer executive compensation packages consisting of the following three components:
|
●
|
base salary;
|
|
●
|
annual incentive compensation (in the form of bonuses or otherwise); and
|
|
●
|
equity awards pursuant to our 2011 Stock Incentive Plan.
|
In each fiscal year, the Compensation Committee determines the amount and relative weighting of each component for all executives, including the named executive officers.
Base Salary
Because our compensation philosophy stresses performance-based awards, base salary is intended to be a smaller portion of total executive compensation relative to long-term equity. Therefore, we target executive base salary at the median level of the compensation guidelines that have been approved by the Compensation Committee. In addition, the Compensation Committee takes into account the executive's scope of responsibility and significance to the execution of our long-term strategy, past accomplishments, experience and personal performance and compares each executive's base salary with those of the other members of senior management. The Compensation Committee may give different weighting to each of these factors for each executive, as it deems appropriate. The Compensation Committee did not retain a compensation consultant or determine a compensation peer group for 2015.
During the year ended June 30, 2015, Mr. Field’s salary increased from $550,000 to $572,225, per the terms and conditions of the Services Agreement and Fields Employment Agreement, and Mr. Clissold’s did not change.
Annual Incentive Compensation
During the year ended June 30, 2015, the Compensation Committee awarded incentive compensation to our Named Executive Officers based on its assessment of the Company’s performance during fiscal 2015 and to more closely align executive compensation with our annual operating plan as measured by financial results. The Compensation Committee determines incentive targets for each Named Executive Officer for our Chief Executive Officer in accordance with the Services Agreement and Fields Employment Agreement, and for our other Named Executive Officers after considering the recommendation of our Chief Executive Officer. Annual incentive awards are designed to reward personal contributions to our success. The thresholds for our Named Executive Officers to earn incentive awards for fiscal 2015 were set at attaining target revenues or sales orders of the respective business unit for which the Named Executive Officer was responsible and attaining specified financing targets for the Company. Achievement of the threshold award level was to result in 100% of the target incentive award associated with each metric for each Named Executive Officer, with incentive awards increasing linearly as achievement exceeded threshold levels up to 150% of the target incentive awards being earned at 150% achievement of performance targets. For exceptional achievement above 150% of target, incentive awards are based on specified metrics for each Named Executive Officer and may be paid in either stock or cash.
-16-
Equity Awards
Except as provided in employment agreements by and between the Company and any of our Named Executive Officers, we do not have a mandated policy regarding the ownership of shares of Common Stock by officers and directors. However, we believe that granting equity awards to executives and other key employees on an ongoing basis gives them a strong incentive to maximize stockholder value and aligns their interests with those of our other stockholders on a long-term basis. Any options or shares of restricted stock granted to executives in connection with an annual performance review are subject to a variety of vesting schedules, as set by the Compensation Committee. Our general policy is to grant stock options and restricted shares of Common Stock with an exercise or issuance price equal to fair market value, which is the closing price of our common stock, as reported by the NASDAQ Capital Market, on the grant date.
We intend to grant equity awards to achieve retention and motivation:
|
●
|
upon the hiring of key executives and other personnel, or upon renewal of executive employment agreements;
|
|
●
|
annually, when we review progress against corporate and personal goals; and
|
|
●
|
when we believe that competitive forces or economic conditions threaten to cause our key executives to lose their motivation and/or where retention of these key executives is in jeopardy.
|
With the Compensation Committee's approval, we grant options to purchase shares of Common Stock or shares of restricted Common Stock when we initially hire executives and other employees or renew existing employment agreements, as a long-term performance incentive. The Compensation Committee has determined the size of the such stock-based awards based upon existing guidelines and hiring negotiations with the individual, in addition to other relevant information regarding the size and type of compensation package considered necessary to enable us to recruit, retain and motivate the executive.
Historically, no employee was eligible for an annual performance grant until the employee had worked for us for at least six months. The Compensation Committee reviews each named Executive Officer’s performance and determines whether they should be granted additional stock-based awards. Aside from stock award grants in connection with annual performance reviews, we do not have a policy of granting additional awards to executives and, consequently, the board of directors and the Compensation Committee has not adopted a policy with respect to granting awards in coordination with the release of material non-public information.
In determining the size of equity awards the Compensation Committee takes into account the executive's current position with and responsibilities to us.
In October 2015, the Compensation Committee approved a grant to Mr. Clissold of 2,500 shares following the Compensation Committee's review of Mr. Clissold's performance during the year, and the Committee’s annual review of compensation of our other executives.
The amount of the grant was determined by considering previous stock based awards, as well as the size of grants made to other key employees.
Only the Board of Directors or the Compensation Committee may approve options or other equity-based compensation to our executives. However, the Board of Directors has authorized the Chief Executive Officer to approve option grants to non-executive employees. All such grants must be consistent with equity incentive guidelines approved by the Compensation Committee. The exercise price for such grants must be equal to the closing price of a share of the common stock as reported by the NASDAQ Capital Market on the date of grant.
Going forward, we intend to continue to evaluate and consider equity grants to our executives on an annual basis. We expect to consider potential equity awards for executives at the same time as we annually review our employees' performance and determine whether to award grants for all employees.
-17-
Accounting and Tax Considerations
Our Compensation Committee has reviewed the impact of tax and accounting treatment on the various components of our executive compensation program. Section 162(m) of the Internal Revenue Code (the “
C
o
de
”) generally disallows a tax deduction to publicly-held companies for compensation paid to "covered" executive officers, to the extent that compensation paid to such an officer exceeds $1 million during the taxable year. We endeavor to award compensation that will be deductible for income tax purposes, though other factors will also be considered. Our Compensation Committee may authorize compensation payments that do not comply with the exemptions to Section 162(m) when we believe that such payments are appropriate to attract and retain executive talent.
Say-on-Pay
Our stockholders approved the non-binding advisory proposal on the compensation of our Named Executive Officers at our annual meeting of stockholders held in March 2013, our most recent annual meeting at which such a vote was taken. Based on this approval from stockholders, the Compensation Committee determined that no changes to our executive compensation program were warranted as a result of the stockholder advisory vote.
Also, at our 2013 annual meeting of stockholders, our stockholders voted to adopt the recommendation of our Board of Directors to conduct future advisory votes on the compensation of our Named Executive Officers every three years. Accordingly, the next stockholder advisory vote on the compensation of our named executive officers will be held at our 2016 annual meeting of stockholders.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis provisions to be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended June 30, 2015. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Annual Report on Form 10-K for the year ended June 30, 2015.
|
The Compensation Committee of the Board of Directors:
|
||
|
Ronald C. Hodge (Chairman)
Robert W. Allen
Richard Juliano
|
-18-
Securities Authorized For Issuance Under Equity Compensation Plans
The following table provides information as of June 30, 2015 regarding equity compensation plans approved by our security holders and equity compensation plans that have not been approved by our security holders.
|
Plan category
|
Number of
securities
to be issued
upon exercise of
outstanding
options, warrants
and rights
|
Weighted-
Average
exercise
price of
outstanding
options, warrants
and rights
|
Number of
securities
remaining
available
for future issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a)
|
||||||||
|
(a)
|
(b)
|
(c)
|
|||||||||
|
Equity compensation plans approved by security holders:
|
|||||||||||
|
Second Amended and Restates 2011 Stock Incentive Plan
|
- | - | - | ||||||||
|
Second Amended and Restated 2011 Employee Stock Purchase Plan
|
- | - | - | ||||||||
|
Total
|
- | - | - | ||||||||
Description Of Equity Compensation Plans
Second Amended and Restates 2011 Stock Incentive Plan
In January 2013, the Board of Directors approved the Second Amended and Restated the 2011 Stock Plan (the “
2011 Plan
”), which plan was approved by shareholders on March 29, 2013. Under the terms of the 2011 Plan, officers, key employees, consultants and directors of the Company are eligible to participate. The maximum aggregate number of shares of Common Stock that may be granted under the 2011 Plan is 500,000 shares. Our Compensation Committee administers the 2011 Plan. The exercise price for each share of Common Stock purchasable under any incentive stock option granted under the 2011 Plan shall be not less than 100% of the fair market value of the Common Stock, as determined by the closing price of our Common Stock on the grant date, as reported on the NASDAQ Capital Market. If the incentive stock option is granted to a stockholder who possesses more than 10% of the Company's voting power, then the exercise price shall be not less than 110% of the fair market value on the date of grant. Each option shall be exercisable in whole or in installments as determined by the Compensation Committee at the time of the grant of such options. All incentive stock options expire after 10 years. If the incentive stock option is held by a shareholder who possesses more than 10% of the Company's voting power, then the incentive stock option expires after five years. If the option holder is terminated, then the incentive stock options granted to such holder expire no later than three months after the date of termination. For option holders granted incentive stock options exercisable for the first time during any fiscal year and in excess of $100,000 (determined by the fair market value of the shares of common stock as of the grant date), the excess shares of common stock shall not be deemed to be purchased pursuant to incentive stock options.
-19-
Second Amended and Restated 2011 Employee Stock Purchase Plan
In January 2013,
the Board of Directors approved
the Second Amended Employee Stock Purchase Plan (the “
ESPP
”),
which plan was approved by shareholders on March 29, 2013. The ESPP
provides every full- and part-time employee of the Company an opportunity to acquire and expand their equity interest in the Company by giving each participating employee the opportunity to purchase shares of Common Stock at a discount from fair market value. Additionally, the ESPP may also be used to issue shares of Common Stock in lieu of cash compensation. The ESPP is administered and interpreted by the Compensation Committee.
401(k) Retirement Plan
The Company offers an employee benefit plan under Benefit Plan Section 401(k) of the Internal Revenue Code. The Company utilizes ADP Retirement Services as its administrator and trustee of the Company’s 401(k) plan. Employees who have attained the age of 18 are immediately eligible to participate. The Company, at its discretion, may match employee’s contributions at a percentage determined annually by the Board of Directors. The Company does not currently match contributions.
Indemnification for Securities Act Liabilities
Nevada law authorizes, and the Company's Bylaws provide for, indemnification of the Company's directors and officers against claims, liabilities and amounts paid in settlement, and expense in a variety of circumstances. Indemnification for liabilities arising under the Securities Act of 1933, as amended (the “
Securities Act
”), may be permitted for directors, officers and controlling persons of the Company pursuant to the foregoing or otherwise. However, the Company has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Compensation Committee (or in a like capacity) for the Company or any other entity.
Related Party Transactions
During the year ended June 30, 2015, the Company was a party to the Service Agreement with FMI, pursuant to which FMI provided certain executive management services to the Company, including designating Mr. Randall K. Fields to perform the functions of President and Chief Executive Officer for the Company. Randall K. Fields, FMI’s designated executive, who also serves as the Company’s Chairman of the Board of Directors, controls FMI. Amounts paid to FMI in connection in with the Service Agreement are reflected above in the Summary Compensation Table.
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding shares of our Series B Preferred beneficially owned as of September 11, 2015 by:
|
(i)
|
each of our officers and directors;
|
|
(ii)
|
all officers and directors as a group; and
|
|
(iii)
|
each person known by us to beneficially own five percent or more of the outstanding shares of our Common Stock, Series B Preferred, and Series B-1 Preferred. Percent ownership is calculated based 19,064,108 shares of Common Stock, 625,375 shares of our Series B Preferred, and 84,200 shares of our Series B-1 Preferred outstanding at September 11, 2015.
|
-20-
Beneficial Ownership of our Series B Preferred
|
Name
|
Series B Convertible Preferred Stock
|
% Ownership of Class
|
||||||
|
Robert W. Allen
|
79,493
|
12.7
|
%
|
|||||
|
Riverview Financial Corp.
|
545,882
|
(1)
|
87.3
|
%
|
||||
|
Randall K. Fields
|
545,822
|
(2)
|
87.3
|
%
|
||||
|
(1)
|
Includes 14,450 shares of Series B Preferred held in the name Julie Fields, Mr. Fields' spouse.
|
|
(2)
|
Includes 531,432 shares of Series B Preferred held in the name of Riverview Financial Corp. and 14,450 shares of Series B Preferred in the name of Julie Fields. Mr. Fields is the beneficial owner of Riverview Financial Corp. and the spouse of Mrs. Fields.
|
Beneficial Ownership of our Series B-1 Preferred
|
Name
|
Series B Convertible Preferred Stock
|
% Ownership of Class
|
||||||
|
Robert W. Allen
|
5,488
|
6.5
|
%
|
|||||
|
Riverview Financial Corp.
|
48,712
|
(1)
|
93.5
|
%
|
||||
|
Fields Management Inc.
|
30,657
|
(1)
|
93.5
|
%
|
||||
|
Randall K. Fields
|
78,712
|
(2)
|
93.5
|
%
|
||||
|
(1)
|
Includes 657 shares of Series B-1 Preferred held in the name Julie Fields, Mr. Fields' spouse.
|
|
(2)
|
Includes 48,055 shares of Series B-1 Preferred held in the name of Riverview Financial Corp., 30,000 shares of Series B-1 Preferred held in the name of Fields Management, Inc. and 657 shares of Series B-1 Preferred in the name of Julie Fields. Mr. Fields is the beneficial owner of Riverview Financial Corp. and Fields Management and the spouse of Mrs. Fields.
|
Beneficial Ownership of our Common Stock
|
Name
|
Common Stock
|
Common Stock Warrants Exercisable Within 60 Days
|
Total Stock and Stock Based Holdings
(1)
|
% Ownership of Class
|
|||||||
|
Randall K. Fields
|
5,128,074
|
(2)
|
964,355
|
(3)
|
6,092,429
|
30.4
|
%
|
||||
|
Edward L. Clissold
|
40,976
|
-
|
40,976
|
*
|
%
|
||||||
|
Robert W. Allen
|
694,720
|
(4)
|
202,167
|
(5)
|
896,887
|
4.7
|
%
|
||||
|
William S. Kies, Jr.
|
35,799
|
3,410
|
(6)
|
39,209
|
*
|
%
|
|||||
|
Richard Juliano
|
34,599
|
2,756
|
(7)
|
37,355
|
*
|
%
|
|||||
|
Austin F. Noll, Jr.
|
53,952
|
1,846
|
(8)
|
55,798
|
*
|
%
|
|||||
|
Ronald C. Hodge
|
401,768
|
123,241
|
(9)
|
525,009
|
2.7
|
%
|
|||||
|
Officers and Directors, as a group (7 persons)
|
6,389,888
|
1,297,775
|
7,687,663
|
37.8
|
%
|
||||||
|
Major Stockholder(s):
|
|||||||||||
|
FMR LLC
|
1,125,634
|
-
|
1,125,634
|
5.9
|
%
|
||||||
-21-
*Less than 1%
|
(1)
|
For purposes of this table “beneficial ownership” is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any shares that such person or group has the right to acquire within 60 days after September 9, 2015. For purposes of computing the percentage of outstanding common shares held by each person or group of persons named above, any shares that such person or group has the right to acquire within 60 days after September 11, 2015, are deemed outstanding but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person or group. As of September 11, 2015, there were 19,048,613 shares of our Common Stock issued and outstanding.
|
|
(2)
|
Includes 517,643 shares of Common Stock held in the name of Fields Management, Inc., of which Mr. Fields is the beneficial owner, 650,693 shares of Common Stock held in the name of Riverview Financial Corp., of which Mr. Fields is the beneficial owner, and 30,667 held by Mr. Fields’ spouse, Julie Fields.
|
|
(3)
|
Includes warrants for 6,875 and 3,165 which are exercisable for $3.60 and $10.00 per share and expire on March 14, 2018 and January 26, 2020 respectively. Includes warrants for 130,753 and 40,250 exercisable at $4.00 per share and expire on February 20, 2020 held by Riverview Financial Corp and Julie Fields, respectively. Mr. Fields is the beneficial owner of Riverview Financial Corp and the spouse of Julie Fields.
|
|
(4)
|
Includes 118,933 shares of Common Stock held in trust, in which Mr. Allen is the trustee.
|
|
(5)
|
Includes warrants for 45,833, 25,581, and 130,753 which are exercisable for $3.60, $6.45, and $4.00 per share and expire on March 14, 2018, August 27, 2018, and February 20, 2020 respectively.
|
|
(6)
|
Includes warrants for 2,750 and 660 which are exercisable for $3.60 and $10.00 per share and expire on March 14, 2018 and January 26, 2020, respectively.
|
|
(7)
|
Includes warrants for 1,833 and 923 which are exercisable for $3.60 and $10.00 per share and expire on March 14, 2018 and January 26, 2020, respectively.
|
|
(8)
|
Warrant is exercisable for $10.00 per share and expires on January 26, 2020.
|
|
(9)
|
Includes warrants for 64,166, 51,163, and 7,912 which are exercisable for $3.60, $6.45, and $10.00 per share and expire on March 14, 2018, August 27, 2018, and January 26, 2020 respectively.
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company’s securities with the Securities and Exchange Commission on Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Directors, executive officers and beneficial owners of more than 10% of the Company’s Common Stock are required by Securities and Exchange Commission regulations to furnish the Company with copies of all Section 16(a) forms that they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended June 30, 2015, each of our directors failed to report the issuance of shares to them in consideration for the payment of director fees owed to them during such fiscal year and/or had one or more late filings related to the acquisition and/or disposition of securities.
-22-
ADDITIONAL INFORMATION
Deadline for Receipt of Stockholder Proposals
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, stockholder proposals to be presented at our Annual Meeting and included in our Proxy Statement and form of proxy relating to that Annual Meeting must be received by us at our principal executive offices at 299 South Main Street, Suite 2370, Salt Lake City, Utah 84111, addressed to our Corporate Secretary, no later than May 21, 2016. These proposals must comply with applicable Nevada law, the rules and regulations promulgated by the Securities and Exchange Commission and the procedures set forth in our Bylaws.
Stockholders who intend to present a proposal at such Annual Meeting without inclusion of such proposal in our proxy materials pursuant to Rule 14a-8 under the Exchange Act are required to provide advanced notice of such proposal to us at the aforementioned address no later than May 21, 2016.
We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and all other applicable requirements.
Stockholder Communications with the Board of Directors
Our Board of Directors provides stockholders with the ability to send communications to the Board of Directors, and stockholders may do so at their convenience. In particular, stockholders may send their communications to: Board of Directors, c/o Corporate Secretary, Park City Group, Inc., 299 South Main Street, Suite 2370, Salt Lake City, Utah, 84111. All communications received by the Corporate Secretary are relayed to the Board of Directors of the Company. Members of the Board of Directors are not required to attend the Annual Stockholders Meeting.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of brokers with account holders who are stockholders of the Company will be “householding” the Company’s proxy materials. A single set of the Company’s proxy materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate set of the Company’s proxy materials, please notify your broker or direct a written request to the Corporate Secretary at 299 South Main Street, Suite 2370, Salt Lake City, Utah 84111 or by calling (435) 645-2000. The Company undertakes to deliver promptly, upon any such oral or written request, a separate copy of its proxy materials to a stockholder at a shared address to which a single copy of these documents was delivered. Stockholders who currently receive multiple copies of the Company’s proxy materials at their address and would like to request “householding” of their communications should contact their broker, bank or other nominee, or contact the Company at the above address or phone number.
Other Matters
At the date of this Proxy Statement, the Company knows of no other matters, other than those described above, that will be presented for consideration at the Annual Meeting. If any other business should come before the Annual Meeting, it is intended that the proxy holders will vote all proxies using their best judgment in the interest of the Company and the stockholders.
-23-
The Notice, mailed to stockholders on or about September 18, 2015, contains instructions on how to access the Company’s 2015 Annual Report on Form 10-K for the fiscal year ended June 30, 2015. The Annual Report on Form 10-K, which includes audited financial statements, does not form any part of the material for the solicitation of proxies.
The Board of Directors invites you to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting in person, please submit your vote by internet, telephone or mail as promptly as possible so that your shares will be represented at the Annual Meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE READ THE ACCOMPANYING PROXY STATEMENT AND THEN VOTE BY INTERNET, TELEPHONE OR E-MAIL AS PROMPTLY AS POSSIBLE. VOTING PROMPTLY WILL SAVE US ADDITIONAL EXPENSE IN SOLICITING PROXIES AND WILL ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING.
By order of the Board of Directors,
Randall K. Fields
Chief Executive Officer, Chairman and Director
-24-
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