pcg8ka_feb92009.htm

Exhibit 99.1

Park City Group, Inc.

Unaudited Pro Forma Combined Condensed Financial Statements

On August 28, 2008, Park City Group, Inc. ("Park City Group", or the "Company") entered into two Stock Purchase Agreements (the “Purchase Transaction”) relating to the acquisition by Park City Group of shares of Series E Preferred Stock of Prescient Applied Intelligence, Inc. (“Prescient”) from existing stockholders of Prescient in exchange for cash.

As a result of the Purchase Transaction, Park City Group acquired approximately 43% of Prescient’s Series E Preferred Stock. The Purchase Transaction was consummated contemporaneously with the execution of an Agreement and Plan of Merger (“Merger Transaction”), pursuant to which Prescient was merged with and into a wholly-owned subsidiary of Park City Group. The Merger Transaction closed on January 13, 2009. In connection with the Purchase Transaction, the sellers of the Series E Preferred Stock also entered into Lockup and Voting Agreements whereby they, subject to certain limited exceptions, agreed (i) not to transfer any of their shares of Prescient Common Stock or Series G Preferred Stock prior to completion or termination of the Merger and (ii) to vote their shares of Prescient Common Stock and Series G Preferred Stock in favor of the Merger.

The following unaudited pro forma combined condensed balance sheet presents Park City Group’s historical financial position combined with Prescient as if the Merger Transaction and the financing for the Merger Transaction had occurred on September 30, 2008, and includes adjustments which give effect to events that are directly attributable to the Merger Transaction and that are factually supportable, regardless of whether they have a continuing impact or are nonrecurring. The unaudited pro forma combined condensed statements of operations present the combined results of Park City Group’s operations with Prescient as if the Merger Transaction and the financing for the Merger Transaction had occurred at the beginning of each of the periods presented and include adjustments that are directly attributable to the Merger Transaction, are expected to have a continuing impact on the combined results, and are factually supportable. The pro forma financial statements are not necessarily indicative of what Park City Group’s financial position or results of operations actually would have been had Park City Group completed the Merger Transaction at the dates indicated. In addition, the unaudited pro forma combined condensed financial information does not purport to project the future financial position or operating results of the combined company.

The unaudited pro forma combined condensed financial statements should be read in conjunction with the:

•	Accompanying Adjustments to the Unaudited Pro Forma Combined Condensed Financial Statements;

•	Separate historical financial statements of Park City Group included in its Annual Report on Form 10-K for the year ended June 30, 2008 and Form 10-Q as of and for the three months ended September 30, 2008; and

•	Separate historical financial statements of Prescient included in Prescient’s Annual Report on Form 10-KSB for the year ended December 31, 2007 and Form 10-Q as of and for the nine months ended September 30, 2008.

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Park City Group prepared the unaudited pro forma combined condensed financial information using the purchase method of accounting. Accordingly, Park City Grop’s estimated cost to acquire Prescient of approximately $9,728,000 has been allocated to the assets acquired and liabilities assumed according to their estimated fair values at the date of acquisition. Any excess of the purchase price over the estimated fair value of the net assets acquired has been recorded as goodwill.

Park City Group is currently determining the fair values of a significant portion of these net assets. The preliminary work performed in estimating the fair values is reflected in these unaudited pro forma combined condensed financial statements. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date.

This final valuation will be based on the actual assets acquired and liabilities assumed at the acquisition date. Although the final determination may result in asset and liability fair values that are different than the preliminary estimates of these amounts included herein, it is not expected that those differences will be material to an understanding of the impact of the Merger Transaction to Park City Group’s financial results.

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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS

YEAR ENDED JUNE 30, 2008

	Historical
	Company			Prescient			Pro Forma Adjustments					Pro Forma
Revenue
Subscriptions	$	203,028		$	5,577,695		$	-				$	5,780,723
Maintenance and support		1,455,344			1,558,663			-					3,014,007
Professional service and other		584,661			1,159,490			-					1,744,151
Software licenses		1,101,940			326,305			-					1,428,245

Total revenue		3,344,973			8,622,153			-					11,967,126

Operating expenses
Customer operations and support		2,419,227			2,368,966			-					4,788,193
Research and development		-			1,231,547			-					1,231,547
Sales and marketing		1,843,912			1,749,088			-					3,593,000
General and administrative		2,073,214			1,749,535			-					3,822,749
Impairment of goodwill		-			7,453,198			-					7,453,198
Depreciation and amortization		505,539			473,610			790,453		(4	)		1,769,602

Total operating expenses		6,841,892			15,025,944			790,453					22,658,289

Gain (loss) from operations		(3,496,919	)		(6,403,791	)		(790,453	)				(10,691,163	)

Other income (expense)
Loss on disposal of assets		(295	)		-			-					(295	)
Interest income (expense)		29,035			(203,831	)		(1,167,395	)	(1	)		(1,342,191	)
Income from patent activities		600,000			-			-					600,000

Loss from operations before income taxes		(2,868,179	)		(6,607,622	)		(1,957,848	)				(11,433,649	)

Provision for income taxes		-			(45,000	)		-					(45,000	)

Net loss		(2,868,179	)		(6,652,622	)		(1,957,848	)				(11,478,649	)

Dividends on preferred stock		(330,837	)		-			-					(330,837	)
Deemed dividend on Series E Preferred Stock		-			(707,208	)		707,208		(3	)		-
Undeclared dividend on Series E Preferred Stock		-			(1,329,050	)		1,329,050		(3	)		-

Net loss attributable to common shareholders	$	(3,199,016	)	$	(8,688,880	)	$	78,410				$	(11,809,486	)

Basic and diluted weighted average number of common shares outstanding:		9,150,000			33,572,282			(33,572,282	)	(2	)		9,150,000

Basic and diluted loss per common share:	$	(0.35	)	$	(0.26	)						$	(1.29	)

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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2008

	Historical
	Company			Prescient			Pro Forma Adjustments					Pro Forma
Revenue
Subscriptions	$	58,104		$	1,477,287		$	-				$	1,535,391
Maintenance and support		288,632			381,348			-					669,980
Professional service and other		145,302			227,966			-					373,268
Software licenses		38,240			110,000			-					148,240

Total revenue		530,278			2,196,601			-					2,726,879

Operating expenses
Customer operations and support		580,544			560,970			-					1,141,514
Research and development		-			366,511			-					366,511
Sales and marketing		300,472			423,357			-					723,829
General and administrative		415,241			463,605			-					878,846
Impairment of goodwill		-			2,369,808			-					2,369,808
Depreciation and amortization		135,563			121,582			197,613		(4	)		454,758

Total operating expenses		1,431,820			4,305,833			197,613					5,935,266

Gain (loss) from operations		(901,542	)		(2,109,232	)		(197,613	)				(3,208,387	)

Other income (expense)
Interest income (expense)		(22,741	)		(27,821	)		(291,849	)	(1	)		(342,411	)
Loss on equity method investment		(197,205	)		-			197,205		(6	)		-

Loss from operations before income taxes		(1,121,488	)		(2,137,053	)		(292,257	)				(3,550,798	)

Provision for income taxes		-			(7,500	)		-					(7,500	)

Net loss		(1,121,488	)		(2,144,553	)		(292,257	)				(3,558,298	)

Dividends on preferred stock		(88,396	)		-			-					(88,396	)
Undeclared dividend on Series E Preferred Stock		-			(334,078	)		334,078		(3	)		-

Net loss attributable to common shareholders	$	(1,209,884	)	$	(2,478,631	)	$	41,821				$	(3,646,694	)

Basic and diluted weighted average number of common shares outstanding:		9,303,000			33,560,791			(33,560,791	)	(2	)		9,303,000

Basic and diluted loss per common share:	$	(0.13	)	$	(0.07	)						$	(0.39	)

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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET

AS OF SEPTEMBER 30, 2008

	Historical
	Company		Prescient		Pro Forma Adjustments					Pro Forma
Assets

Current assets
Cash	$	321,873	$	3,181,843	$	-				$	3,503,716
Receivables, net		795,803		994,503		-					1,790,306
Unbilled receivables		77,052		-		-					77,052
Prepaid expenses and other current assets		68,416		217,034		-					285,450

Total current assets		1,263,144		4,393,380		-					5,656,524

Property and equipment, net		452,405		170,207		5,083		(5	)		627,695

Other assets
Deposits and other assets		122,391		46,835		-					169,226
Capitalized software costs, net		567,870		-		-					567,870
Equity method investment		2,569,981		-		(2,569,981	)	(6	)		-
Software		-		-		1,735,278		(5	)		1,735,278
Customer relationships		-		-		4,433,970		(5	)		4,433,970
Goodwill		-		7,434,476		(7,434,476	)	(5	)		2,444,832
						2,444,832		(5	)
Intangible assets, net		-		1,000,000		(1,000,000	)	(5	)		-

	$	4,975,791	$	13,044,898	$	(2,385,294	)			$	15,635,395

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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET (CONTINUED)

AS OF SEPTEMBER 30, 2008

Historical

Company

Prescient

Pro Forma Adjustments

Pro Forma

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable	$	468,191		$	207,240		$	-				$	675,431
Accrued liabilities		421,160			724,125			-					1,145,285
Deferred revenue		256,933			961,706			(661,448	)	(5	)		557,191
Current portion of capital lease obligations		141,731			-			-					141,731
Line of credit		700,000			-			(370,981	)	(6	)		329,019
Notes payable, related party		2,199,000			-			(2,199,000	)	(6	)		-
Notes payable, current portion		-			2,269,670			-					2,269,670

Total current liabilities		4,187,015			4,162,741			(3,231,429	)				5,118,327

Deferred maintenance – long term portion		-			18,700			(18,700	)	(5	)		-
Notes payable, less current portion		-			-			9,728,292		(5	)		9,728,292
Capital lease obligations, less current portion		166,553			-			-					166,553

Total liabilities		4,353,568			4,181,441			6,478,163					15,013,172

Commitments and contingencies

Stockholders' Equity
Preferred stock		6,125			-			-					6,125
Series E preferred stock		-			16,567,747			(16,567,747	)	(5	)		-
Series G preferred stock		-			4,798,838			(4,798,838	)	(5	)		-
Common stock		94,324			33,561			(33,561	)	(5	)		94,324
Additional paid-in capital		27,066,569			104,821,360			(104,821,360	)	(5	)		27,066,569
Subscription receivable		(352,500	)		-			-					(352,500	)
Accumulated deficit		(26,192,295	)		(117,358,049	)		117,358,049		(5	)		(26,192,295	)

Total stockholders' equity		622,223			8,863,457			(8,863,457	)				622,223

Total liabilities and stockholders' equity	$	4,975,791		$	13,044,898		$	(2,385,294	)			$	15,635,395

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ADJUSTMENTS TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

(1)	To record estimated interest expense at 12% for the period on $9,728,292 notes payable and a credit facility entered into in connection with the acquisition by Park City Group Inc. of Prescient.

(2)	To eliminate Prescient’s common stock.

(3)	To eliminate dividends to Prescient's preferred stockholders.

(4)	To record estimated amortization of acquired intangible assets.

(5)	To record the purchase price of $9,728,292 (assumed to be entirely paid by long-term notes payable and a credit facility with a bank), allocate the purchase price to the assets acquired and liabilities assumed, and eliminate the equity and retained earnings of Prescient. The amounts for the assets acquired and liabilities assumed are based on estimates, and the Park City Group is in process of obtaining a third-party business valuation report. Upon completion of the valuation, these amounts will change and Park City Group will allocate the purchase price based on the valuation report.

(6)	To eliminate Park City Group’s equity method investment in Prescient and the associated loss on equity method investment.

Nevada	37-1454128
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

Dated: February 9, 2009	PARK CITY GROUP, INC.
	By: /s/ John Merrill
	John Merrill Chief Financial Officer


Exhibit No.		Description

99.1		Pro Forma Financial Information