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Track Group, Inc. (TRCK) SEC Filing 10-K Annual report for the fiscal year ending Saturday, September 30, 2017

Track Group, Inc.

CIK: 1045942 Ticker: TRCK
 
Exhibit 99.1
PRESS RELEASE
AUGUST 10, 2017
Track Group Reports Third Quarter 2017 Results
Revenue up 9%, Net Cash from Operations up 50%,
Adjusted EBITDA up 22%
 
ROMEOVILLE, Illinois — August 10, 2017 — Track Group today announced financial results for its fiscal 2017 third-quarter ended June 30, 2017.
 
Third Quarter Highlights
 
Revenue is up 9% from one year ago and 13% year to date
Net cash provided by operating activities is up 50% year to date
Adjusted EBITDA is up 22% from one year ago and 18% year to date
Net income up $2.5 million from one year ago
Progress continues on restructuring
 
With revenue up 9 percent year-over-year, we’re happy to report twelve consecutive quarters of accelerating growth,” said Guy Dubois, Chairman and CEO of Track Group. “We’re very excited about the advances in our device-agnostic platform, smartphone applications and analytics software coming this fall.”
 
Key Financial Results
 
Revenue increased 9% - For the three months ended June 30, 2017, the Company recognized revenue from operations of $7,351,354 compared to $6,754,411 for the three months ended June 30, 2016, an increase of $596,943 or 9%. The increase in revenue was principally the result of (i) increases in total growth of our North American monitoring operations driven by clients in Indiana and Virginia, and (ii) growth of offender monitoring in Chile.
 
Cash from operations increased 50%The Company provided $2,937,513 of cash from operating activities during the nine months ended June 30, 2017, compared to $1,964,863 in the nine months ended June 30, 2016, representing an increase of $972,650 or 50%.
 
Adjusted EBITDA increased 22% – Adjusted EBITDA for the third quarter of 2017 increased approximately 22% to $1,235,000 up from $1,015,000 in the same period in 2016.
 
Net income increased $2.5M - The Company had net income of $746,549 for the three months ended June 30, 2017, compared to a net loss of $1,783,946 for the three months ended June 30, 2016, an increase of $2,530,495. This increase in net income is largely due a gain on settlement of milestone payments, offset by an increase in income tax expense.
 
Progress continues on restructuring - The Company continues to make progress in its Restructuring Plan approved in the quarter ended December 31, 2016, which is intended to reduce certain expenses, and reduce the Company's dependence on external sources of financing.
 
“I remain optimistic about the Company’s ability to restructure its long-term debt,” said Peter Poli, Track Group’s Chief Financial Officer. “We are working closely with our board, our debt holders and our other stakeholders to come to the right solution.”
 
The Company reaffirms Outlook from its May 12, 2017 news release indicating FY2017 Revenue of $30-33 million and Adjusted EBITDA Margin of 12-15%.
 
 
 
 
About Track Group, Inc.
Track Group designs, manufactures, and markets location tracking devices and develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications. The Company's products and services are designed to empower professionals in security, law enforcement, corrections and rehabilitation organizations worldwide with single-sourced offender management solutions that integrate reliable intervention technologies to support re-socialization and monitoring initiatives.
 
The company currently trades under the ticker symbol "TRCK" on the OTCQX exchange. For more information, visit www.trackgrp.com.
 
Contacts:
Peter Poli – Chief Financial Officer
peter.poli@trackgrp.com
877-260-2010
 
Steve Hamilton - Chief Marketing Officer
steve.hamilton@trackgrp.com
877-260-2010
 
Forward-Looking Statements
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to Track Group, Inc. & subsidiaries ("Track Group") are intended to identify such forward-looking statements. These statements are only predictions and reflect Track Group's current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. Track Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in Track Group's annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. New risks emerge from time to time. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the dates on which they are made.
 
Non-GAAP Financial Measures
This release includes financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission including non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are based on the financial figures for the respective period.
 
Non-GAAP Adjusted EBITDA excludes items included but not limited to interest, taxes, depreciation, amortization, impairment charges, gains and losses, currency effects, one time charges or benefits that are not indicative of operations, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, stock based or other non-cash compensation or other stated cash and non-cash charges (the "Adjustments").
 
The Company believes the non-GAAP measures provide useful information to both management and investors when factoring in the Adjustments. Specific disclosure regarding the Company's financial results, including management's analysis of results from operations and financial condition, are contained in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2016, and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company's Form 10-K and other reports, including the risk factors contained in such Form 10-K.
 
 
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
June 30,
 
 
 
September 30,
 
Assets
 
2017
 
 
2016
 
Current assets:
 
 (Unaudited)
 
 
 
 
Cash
 $1,893,966 
 $1,769,921 
Accounts receivable, net of allowance for doubtful accounts of $3,166,215 and $2,335,508, respectively
  5,847,987 
  6,894,095 
Note receivable, current
  234,733 
  334,733 
Prepaid expenses and other
  567,933 
  816,708 
Inventory, net of reserves of $26,934 and $98,150, respectively
  210,574 
  521,851 
Total current assets
  8,755,193 
  10,337,308 
Property and equipment, net of accumulated depreciation of $1,674,800 and $1,421,389, respectively
  936,637 
  1,226,461 
Monitoring equipment, net of accumulated amortization of $4,279,008 and $3,438,074, respectively
  3,758,926 
  4,358,117 
Intangible assets, net of accumulated amortization of $9,454,908 and $8,233,659, respectively
  25,064,504 
  25,540,650 
Goodwill
  8,195,103 
  7,955,876 
Other assets
  3,099,301 
  2,900,911 
Total assets
 $49,809,664 
 $52,319,323 
 
    
    
Liabilities and Stockholders’ Equity
    
    
Current liabilities:
    
    
Accounts payable
 $2,676,087 
 $2,771,101 
Accrued liabilities
  6,220,197 
  3,976,192 
Current portion of long-term debt, net of discount of $0 and $222,973, respectively
  62,463 
  3,245,732 
Total current liabilities
  8,958,747 
  9,993,025 
Stock payable - related party
  - 
  3,289,879 
Long-term debt, net of current portion and discount of $241,554 and $185,811, respectively
  33,645,419 
  30,345,803 
Total liabilities
  42,604,166 
  43,628,707 
 
    
    
Stockholders’ equity:
    
    
Common stock, $0.0001 par value: 30,000,000 shares authorized; 10,480,984 outstanding at June 30, 2017 and 10,333,516 at September 30, 2016
  1,048 
  1,034 
Additional paid-in capital
  300,607,005 
  298,876,399 
Accumulated deficit
  (292,794,210)
  (289,341,503)
Accumulated other comprehensive income (loss)
  (608,345)
  (845,314)
Total equity
  7,205,498 
  8,690,616 
Total liabilities and stockholders’ equity
 $49,809,664 
 $52,319,323 
 
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
(Unaudited)
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
June 30,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Monitoring services
 $7,157,424 
 $6,598,128 
 $21,577,313 
 $18,947,752 
Other
  193,930 
  156,283 
  665,574 
  716,302 
Total revenues
  7,351,354 
  6,754,411 
  22,242,887 
  19,664,054 
 
    
    
    
    
Cost of revenues:
    
    
    
    
Monitoring, products & other related services
  2,734,920 
  2,462,281 
  8,936,501 
  7,060,036 
Depreciation & amortization included in cost of revenues
  672,562 
  488,655 
  1,633,629 
  1,498,407 
Impairment of monitoring equipment and parts
  210,000 
  60,000 
  344,787 
  180,000 
Total cost of revenue
  3,617,482 
  3,010,936 
  10,914,917 
  8,738,443 
 
    
    
    
    
Gross profit
  3,733,872 
  3,743,475 
  11,327,970 
  10,925,611 
 
    
    
    
    
Operating expenses: 
    
    
    
    
General & administrative
  3,611,903 
  3,263,951 
  9,142,113 
  9,240,935 
(Gain) loss on sale of assets
  (2,500)
  - 
  763,531 
  - 
Restructuring costs
  (1,265)
  - 
  569,135 
  - 
Selling & marketing
  572,334 
  407,829 
  1,786,312 
  1,684,130 
Research & development
  292,938 
  610,398 
  1,460,354 
  1,741,285 
Depreciation & amortization
  535,892 
  621,311 
  1,744,276 
  2,055,915 
Total operating expenses  
  5,009,302 
  4,903,489 
  15,465,721 
  14,722,265 
 
    
    
    
    
Loss from operations
  (1,275,430)
  (1,160,014)
  (4,137,751)
  (3,796,654)
 
    
    
    
    
Other income (expense):
    
    
    
    
Interest expense, net
  (672,369)
  (683,482)
  (2,116,805)
  (2,009,399)
Currency exchange rate gain (loss)
  181,966 
  18,438 
  75,859 
  (66,119)
Gain on settlement of milestone payments
  3,000,000 
  - 
  3,213,940 
  - 
Other income, net
  4,934 
  41,112 
  13,701 
  40,393 
Income (loss) before income taxes
  1,239,101 
  (1,783,946)
  (2,951,056)
  (5,831,779)
Income tax expense
  492,552 
  - 
  501,651 
  - 
Net income (loss) attributable to common shareholders
  746,549 
  (1,783,946)
  (3,452,707)
  (5,831,779)
Foreign currency translation adjustments
  746,156 
  (280,319)
  236,969 
  689,936 
Comprehensive income (loss)
 $1,492,705 
 $(2,064,265)
 $(3,215,738)
 $(5,141,843)
Basic and diluted income (loss) per common share
 $0.07 
 $(0.17)
 $(0.33)
 $(0.57)
Weighted average common shares outstanding, basic and diluted
  10,486,665 
  10,302,136 
  10,384,566 
  10,277,973 
  
 
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
In $000’s except share data (Unaudited)
 
 
 
Three Months Ended
June 30,
 
 
Nine Months Ended
June 30,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
 $746 
 $(1,784)
 $(3,453)
 $(5,832)
Interest expense, net
  672 
  684 
  2,117 
  2,010 
Income taxes (1)
  493 
  15 
  502 
  28 
Depreciation, amortization and impairment
  1,419 
  1,176 
  3,723 
  3,801 
Stock based compensation
  1,028 
  655 
  905 
  1,284 
Restructuring charges (2)
  (1)
  - 
  569 
  - 
Gain on contingent share liability
  (3,000)
  - 
  (3,214)
  - 
Loss on sale of assets
  (2)
  - 
  764 
  - 
Other charges, net (3)
  (120)
  269 
  371 
  640 
Non GAAP Adjusted EBITDA
 $1,235 
 $1,015 
 $2,284 
 $1,931 
Non GAAP Adjusted EBITDA, percent of revenue
  16.8%
  15.0%
  10.3%
  9.8%
 
    
    
    
    
 
 
 
Three Months Ended
June 30,
 
 
Nine Months Ended
June 30,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Non-GAAP EPS
 
 
 
 
 
 
 
 
 
 
 
 
Net (income) loss attributable to common shareholders
 $746 
 $(1,784)
 $(3,453)
 $(5,832)
Interest expense, net
  672 
  684 
  2,117 
  2,010 
Income taxes (1)
  493 
  15 
  502 
  28 
Depreciation, amortization and impairment
  1,419 
  1,176 
  3,723 
  3,801 
Stock based compensation
  1,028 
  655 
  905 
  1,284 
Restructuring charges (2)
  (1)
  - 
  569 
  - 
Gain on contingent share liability
  (3,000)
  - 
  (3,214)
  - 
Loss on sale of assets
  (2)
  - 
  764 
  - 
Other charges, net (3)
  (120)
  269 
  371 
  640 
Non GAAP net income to common shareholders
 $1,235 
 $1,015 
 $2,284 
 $1,931 
Weighted average common shares outstanding
  10,486,665 
  10,302,136 
  10,384,566 
  10,277,973 
Non-GAAP earnings per share
 $0.12 
 $0.10 
 $0.22 
 $0.19 
 
    
    
    
    
 
    
    
    
    
(1) Currently, the Company has significant U.S. tax loss carryforwards that may be used to offset future taxable income, subject to IRS limitations. However, the Company is still subject to certain state, commonwealth, and other foreign based taxes.
(2) Includes restructuring charges associated with outsourcing one of our monitoring centers and moving our headquarters to the Chicagoland area.
(3) Other charges may include gains or losses, non-cash currency impacts, non-recurring accrual adjustments, legal settlements and reserves associated with contracts in Mexico.
 

 
 
 

The following information was filed by Track Group, Inc. (TRCK) on Thursday, August 10, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Document And Entity Information
Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (parenthetical)
Condensed Consolidated Statements Of Cash Flows
Condensed Consolidated Statements Of Operations And Comprehensive Loss
Consolidated Statements Of Stockholders??? Equity
Accrued Liabilities
Accrued Liabilities (details)
Accrued Liabilities (tables)
Acquisitions
Certain Relationships And Related Transactions
Certain Relationships And Related Transactions (details 1)
Certain Relationships And Related Transactions (details Narrative)
Certain Relationships And Related Transactions (details)
Certain Relationships And Related Transactions (tables)
Commitments And Contingencies
Commitments And Contingencies (details Narrative)
Commitments And Contingencies (details)
Commitments And Contingencies (tables)
Common Stock
Common Stock (details Narrative)
Debt Obligations
Debt Obligations (details 1)
Debt Obligations (details 2)
Debt Obligations (details Narrative)
Debt Obligations (details)
Debt Obligations (tables)
Disposition
Immaterial Error Correction (details)
Immaterial Error Correction (tables)
Immaterial Error Corrections
Income Taxes
Income Taxes (details 1)
Income Taxes (details Narrative)
Income Taxes (details)
Income Taxes (tables)
Intangible Assets
Intangible Assets (details 1)
Intangible Assets (details 2)
Intangible Assets (details Narrative)
Intangible Assets (details)
Intangible Assets (tables)
Organization And Nature Of Operations
Preferred Stock
Preferred Stock (details Narrative)
Restructuring
Restructuring (details Narrative)
Restructuring (details)
Restructuring (tables)
Stock Options And Warrants
Stock Options And Warrants (details 1)
Stock Options And Warrants (details Narrative)
Stock Options And Warrants (details)
Stock Options And Warrants (tables)
Subsequent Events
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (details 1)
Summary Of Significant Accounting Policies (details 2)
Summary Of Significant Accounting Policies (details 3)
Summary Of Significant Accounting Policies (details 5)
Summary Of Significant Accounting Policies (details 6)
Summary Of Significant Accounting Policies (details Narrative)
Summary Of Significant Accounting Policies (details)
Summary Of Significant Accounting Policies (policies)
Summary Of Significant Accounting Policies (tables)
Ticker: TRCK
CIK: 1045942
Form Type: 10-K Annual Report
Accession Number: 0001654954-17-011751
Submitted to the SEC: Tue Dec 19 2017 4:46:02 PM EST
Accepted by the SEC: Tue Dec 19 2017
Period: Saturday, September 30, 2017
Industry: Communications Equipment

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